Australian Energy Resource Assessment

Department of Resources, Energy and Tourism
Minister for Resources and Energy: The Hon. Martin Ferguson, AM MP

Secretary: Mr John Pierce
Geoscience Australia
A/g Chief Executive Officer: Dr Chris Pigram
Australian Bureau of Agricultural and Resource Economics (ABARE)
Executive Director: Phillip Glyde
Commonwealth of Australia, 2010

This work is copyright. Apart from any fair dealings for the purpose of study, research, criticism,
or review, as permitted under the Copyright Act 1968, no part may be reproduced by any process
without written permission. Copyright is the joint responsibility of the Chief Executive Officer,
Geoscience Australia and the Executive Director, ABARE. Requests and enquiries should be
directed to the Chief Executive Officer, Geoscience Australia, GPO Box 378, Canberra ACT 2601
and the Executive Director, ABARE, GPO Box 1563, Canberra ACT 2601.
Geoscience Australia and ABARE have tried to make the information in this product as accurate
as possible. However, it does not guarantee that the information is totally accurate or complete.
Therefore, you should not solely rely on this information when making a commercial decision.
ISBN 978-1-921672-59-0 (hard copy)

ISBN 978-1-921672-58-3 (web)
GeoCat # 70142
Bibliographic reference: Geoscience Australia and ABARE, 2010, Australian Energy Resource
Assessment, Canberra
Australian Energy
Resource Assessment

GPO Box 9839
Canberra ACT 2601
www.ret.gov.au
GPO Box 378
Canberra ACT 2601
www.ga.gov.au
Australian Bureau of Agricultural

and Resource Economics
GPO Box 1563
Canberra ACT 2601
www.abare.gov.au
Acknowledgments
This assessment and report was commissioned by
the Australian Government Department of Resources,
Energy and Tourism (RET) and jointly undertaken by
Geoscience Australia and ABARE.
Clean Energy Initiative, and Industrial Energy

Efficiency Branches of the Energy and Environment
Division; Energy White Paper Secretariat.
This report is the result of input from many

individuals and agencies.
Lindy Gratton (Geoscience Australia)
Assessment Team Leader

Lynton Jaques
Silvio Mezzomo, Chris Evenden (Geoscience Australia),

Tim Johns (formerly of Geoscience Australia)
Authors
Technical editing
Geoscience Australia: Lynton Jaques, Marita

Bradshaw, Leesa Carson, Anthony Budd,
Michael Huleatt, David Hutchinson, Ian Lambert,
Steve LePoidevin, Aden McKay, Yanis Miezitis,
Ron Sait, and Ron Zhu; and Michael Hughes
(formerly of Geoscience Australia).
Denis Hally-Burton, Dean Hoatson, Elizabeth

Fredericks (Geoscience Australia)
ABARE: Allison Ball, Clara Cuevas-Cubria, Alan

Copeland, Lindsay Hogan, Michael Lampard,
Apsara Maliyasena, Robert New, Kate Penney,
and Rebecca Petchey; and Rebecca McCallum,
Suwin Sandu, and Suthida Warr (formerly of ABARE).
Other contributors
A number of colleagues at Geoscience Australia,
ABARE and the Department of Resources Energy and
Tourism (RET) have contributed to the preparation of
this report.
ii
Strategic guidance and support was provided by:

Drew Clarke and Tania Constable (RET), Neil Williams
and Chris Pigram (Geoscience Australia), Terry
Sheales and Jane Melanie (ABARE).
The following people provided data or information,
advice and/or reviews of draft chapters or sections:
Geoscience Australia: David Arnold, Andrew
Barnicoat, Andrew Barrett, Tom Bernecker, Chris
Boreham, Peter Harris, Andrew Heap, Bill McKay,
Clinton Foster, Ed Gerner, Bruce Goleby, Riko
Hashimoto, Subhash Jaireth, Aleks Kalinowski,
John Kennard, Robert Langford, Gabriel Nelson,
Peter Southgate, Phil Symonds, Jennie Totterdell,
and George Webb.
ABARE: Lisa Elliston, Arif Syed and Andrew Schultz.
RET: Offshore Resources, Minerals, Fuels and
Uranium, International, Resources Development
and Taxation, and Low Emissions Coal and CO2
Branches of the Resources Division; Energy Futures,
Environment, National Energy Market Branch,
AUSTRA L I AN E N E R GY R E S O U R C E A S S E S S M E NT
Design and production

Graphics
Other acknowledgements
A number of individuals and organisations have kindly
provided invaluable information and advice on this
report. This is very much appreciated and thanks are
extended particularly to:
The Energy White Paper High Level Consultative
Committee; Australian Coal Association;
Australian Geothermal Energy Association Inc;
Australian Petroleum Production and Exploration
Association; Clean Energy Council; Australian
Uranium Association; Queensland Government
Department of Mines and Energy; and NSW
Department of Primary Industries;
Individuals: Dr Michael Connarty (Hydro
Tasmania), Dr Peter Coppin (CSIRO Marine
and Atmospheric Research), Simon Eldridge
(Queensland Energy Resources Ltd), Dr Agu
Kantsler (Woodside), Andy Lloyd (Rio Tinto
Australia), Dr Peter McCabe (CSIRO Petroleum
Resources), Dr Deborah OConnell (CSIRO
Sustainable Ecosystems), Luke Osborne
(Windlab Systems Pty Ltd), Dr Trevor Powell,
Ray Prowse (Centre for Sustainable Energy
Systems, Australian National University), Richard
Schodde (MinEx Consulting Pty Ltd), Dr Jim
Smitham (CSIRO Energy Technology), Dr Igor
Skyrabin (Centre for Sustainable Energy Systems,
Australian National University), Wes Stein (CSIRO
Energy Technology), and John Titchen (formerly
Hydro Tasmania).
Many agencies and individuals have given permission
to use information from previous publications and
reports and to reproduce images. While this is
acknowledged at the appropriate location in the
text, appreciation of each contribution is also
extended here.
Foreword
The Australian Energy Resource Assessment sets a new standard for supplying
information across all energy sectors and understanding Australias energy future.
Australias energy resources are the envy of the world. We have an abundance of
both fossil and renewable fuels, many with potential we are only now beginning
to realise. Our energy resources power our homes, cars and industry, and deliver
considerable economic benefits. The energy sector employs people in every state
and territory and assists in the building of communities in remote areas.
Australia is in a unique position to support economic growth and growing global
demand for energy. Nearly 20 cents in every dollar that Australia earns from
overseas comes from energy resources and there is potential for much more. With
new LNG projects getting up and running, by 2020 Australia can be the worlds
second largest LNG exporter behind Qatar. Exports of coal and uranium are also
expected to grow strongly over the next two decades. Domestically the use of our
vast renewable energy resources will increase.
The Australian Energy Resource Assessment is a national prospectus for energy
resources. It provides information crucial to those seeking to invest in Australian
energy exploration and development, and describes in detail our known resources,
and the potential for undeveloped resources both now and over the next two
decades. It also increases understanding of our renewable resources which
will assist investors seeking to develop these resources. As our energy use is
constantly evolving, the Australian Energy Resource Assessment will also support
informed decisions on future energy options.
By stimulating investment in the exploration and
development of our energy resources we will ensure
our economic prosperity, strengthen communities
and develop skills for Australian workers. In a century
when energy may come to be the defining global issue,
we are committed to maintaining energy security for
ourselves and contributing to the energy security of our
trading partners.
The Australian Energy Resource Assessment is part of
our vision for the future. A future where all Australians
benefit from Australias energy resources.
Martin Ferguson AM MP
Minister for Resources and Energy
AU S T RA LIA N E N E RGY RE S O U RC E A S SES SMENT
iii
iv
Preface
The secure supply of affordable, reliable,

environmentally sustainable energy is essential to
Australias future economic growth and prosperity.
Australias future energy supply will need to have
lower greenhouse gas emissions in order to meet
the challenges posed by climate change driven
by rising levels of carbon dioxide in the Earths
atmosphere. This requires a higher level of
understanding of Australias energy resources
and the factors likely to affect their development
and use.
Geoscience Australia and ABARE were
commissioned by the Australian Government
Department of Resources, Energy and Tourism to
undertake a comprehensive and integrated scientific
and economic assessment of Australias energy
resources. The assessment aims to inform future
industry investment analysis and decision making
and government policy development. It is the first
time such an assessment has been undertaken.
Geoscience Australia is the Australian Governments
geoscience agency which provides geoscientific
information and knowledge to enable government
and the community to make informed decisions
about the exploitation of resources, the management
of the environment, and the safety of critical
infrastructure.
The Australian Bureau of Agricultural and Resource
Economics (ABARE) is the Australian Governments
economic research agency which provides independent
economic research, analysis and forecasting on issues
relating to Australias agricultural, fishing, forestry, and
energy and minerals industries.
The assessment brings together public information
from a range of domestic and international
sources, as well as the latest information held by
Geoscience Australia and ABARE. For each of these
resources, information and analysis is provided on
current and potential resource size, distribution
and characteristics, and the Australian and world
markets. It also contains market projections to
2030 and analysis of prices, costs, government
policies, technological developments, environmental
considerations and other key factors likely to affect
the development and utilisation of the resource.
In particular, renewable energy resources energy
resources that are replaced naturally on a time
scale similar to their use are expected to play an
increasingly important role in Australias energy

mix in the next two decades, especially in electricity
generation. Renewable energy resources are diverse.
They include geothermal; hydro; wind; solar; ocean;
and bioenergy sources.
Non-renewable energy resources will also continue
to play an important role in Australia and overseas.
These resources are dominated by the fossil fuels,
which include: crude oil, condensate, liquefied
petroleum gas and shale oil; conventional coal seam
gas, tight gas and shale gas; and black and brown
coal, as well as the nuclear energy fuels uranium
and thorium (potential). The stock of non-renewable
energy resources is ultimately finite, but there is
still good potential for discovering new economic
reservoirs to replace the resources that are mined
or produced, and so ensure future indigenous supply.
The assessment covers the following resources:
crude oil, condensate, liquefied petroleum gas,
and shale oil;
conventional coal seam gas, tight gas, shale gas,
and gas hydrates;
black and brown coal;
uranium and thorium;
geothermal;
hydro;
wind;
solar;
ocean (wave, tidal, and ocean thermal); and
bioenergy,
and is structured as follows.
Chapter 1 presents a summary of the assessment
and identifies key findings.
Chapter 2 is an overview of Australias energy
resource base and market. It provides a holistic
assessment of our combined energy resources,
energy-related infrastructure, and Australian energy
consumption, production and trade, as well as our
place in the world energy market. It also assesses
the key factors likely to affect the development and
utilisation of Australias energy resources in the next
two decades, including economic and population
growth, energy prices, cost competitiveness of
energy sources, government policies, technological
developments and environmental considerations.
Chapters 3 to 12 contain detailed individual
assessments for each of Australias key energy
resources. Each resource assessment follows a

similar structure. The first part is a summary of
the key information in the chapter. The second part
includes background with definitions, the structure
of the industry and the world market. The third part
covers detailed information on the resources, such as
economic and total demonstrated resources, location
and characteristics. It also provides information on
the Australian market for that resource, including
production, consumption, recent growth, and any
trade that occurs. The fourth part contains an outlook
to 2030, which is a critical part of the assessment.
It includes an assessment of the key factors that
will affect the resource over that 20-year timeframe,
including prices, cost of development, government
policies, technological developments, infrastructure
and environmental considerations. It also includes
analysis of potential resources not yet identified, as
well as projections of production, consumption, and
any trade to 202930. These projections incorporate
the Renewable Energy Target of 20 per cent by 2020
and a 5 per cent carbon emissions reduction below
2000 levels by 2020.
vi
These assessments are supported by a number

of Appendices. The Terms of Reference for the
assessment are given in Appendix A. Appendix B
contains a list of abbreviations used in this report
and Appendix C provides a glossary of energyrelated terms. An authoritative and rigorous form
of resource classification, particularly for nonrenewable resources, is central to ensuring that
investment decisions can be made with confidence.
Appendix D provides an explanation of how the
non-renewable resources are classified and
quantified, based largely on the McKelvey resource
classification system. Renewable energy resources
are commonly transient and not always available,
and hence not readily classified using the McKelvey
system. Renewable resources are often reported

in terms of output or installed capacity. Estimates
of renewable resource potential are based on
maps that show the energy (or power) potentially
or theoretically available at the site and detailed
studies of the annual and diurnal variation in
the energy to determine the capacity factor (the
average actual energy output compared with the
theoretical maximum possible output if the energy
was continuously and fully available for use).
In this assessment, energy resources, production,
consumption and trade have generally been
converted to a common energy unit petajoules
(PJ) to enable direct comparison of different
energy sources. Mineral and petroleum resources
are also presented in volume or mass units
commonly used in industry.
The energy content of the different energy
sources varies significantly. Fuels such as oil,
natural gas, LNG and LPG generally have a
high energy content, whereas brown coal and
biomass generally have a low energy content for
an equivalent weight. The energy content in this
context is the gross energy content of the fuel
that is, the total amount of heat that will be
released by combustion. Average energy contents
and conversion factors are given in Appendix E.
The values are indicative only because the quality
of any fuel varies according to factors such as
location and air pressure, grade of the resource,
and so on.
Australias petroleum and mineral resources have
been formed by geological processes acting within
a time scale of millions of years. The geological
time scale and the timing of major energy forming
events in Australia is given in Appendix F.
Contents
Acknowledgments
ii
Foreword
iii
Preface
Chapter 1: Executive Summary
1.1
Summary
1.2
Introduction
1.3
Australia in the world energy market
1.4
Australias energy resources and market
1.5
Outlook for Australias energy resources and market to 2030
Chapter 2: Australias Energy Resources and Market
2.1
2.2
2.3
2.4
2.5
Summary
2.1.1
2.1.2
Australias energy resources and infrastructure
2.1.3
Australias energy market to 2030
3.2
3.3
11
12
2.2.1
Current world market snapshot
13
2.2.2
World energy market outlook to 2030
14
Australias energy resources and infrastructure
18
2.3.1
Australias energy resource base
18
2.3.2
Distribution, ownership and administration of energy resources
22
2.3.3
Energy infrastructure
23
Australias energy market to 2030
26
2.4.1
Energy market drivers
26
2.4.2
Overview of Australian energy production, consumption and trade
33
2.4.3
Outlook for Australias energy market
35
References
Chapter 3: Oil
3.1
10
40
41
Summary
41
3.1.1
World oil resources and market
41
3.1.2
Australias oil resources
41
3.1.3
Australias oil market
42
Background information and world market
43
3.2.1
Definitions
43
3.2.2
Oil supply chain
44
3.2.3
World oil market
47
Australias oil resources and market
51
3.3.1
51
Crude oil resources
vii
viii
CONTE NTS
5.4
5.5
Outlook to 2030 for Australias resources and market
149
5.4.1
Key factors influencing the outlook
149
5.4.2
Outlook for coal market
163
References
170
Chapter 6: Uranium and Thorium
171
6.1
6.2
Summary
171
6.1.1
World uranium and thorium resources and market
171
6.1.2
Australias uranium and thorium resources
171
6.1.3
Key factors in utilising Australias uranium and thorium resources
172
6.1.4
Australias uranium and thorium market
172
Uranium
6.2.1
6.2.2
6.2.3
6.3
173
Definitions
173
Uranium supply chain
173
World uranium market
175
Australias uranium resources and market
180
Uranium resources
180
Uranium market
181
185
185
Outlook for uranium resources
190
Outlook for uranium market
193
Thorium
6.3.1
6.3.2
6.3.3
6.4
173
196
196
Definitions
196
Thorium supply chain
196
World thorium market
196
Australias thorium resources and market
198
Thorium resources
198
Thorium market
199
199
199
References
201
Chapter 7: Geothermal Energy
203
7.1
Summary
203
7.1.1
World geothermal resources and market
203
7.1.2
Australias geothermal resources
203
7.1.3
Key factors in utilising Australias geothermal resources
204
7.1.4
Australias geothermal energy market
205
7.2
7.3
205
7.2.1
Definitions
205
7.2.2
Geothermal energy supply chain
207
7.2.3
World geothermal energy market
208
Australias geothermal resources and market
212
7.3.1
Geothermal resources
212
7.3.2
Geothermal energy market
216
ix
7.4
7.5
218
Key factors influencing the future development of Australias geothermal energy resources 218
7.4.2
Outlook for geothermal energy market
References
222
223
Chapter 8: Hydro Energy
225
8.1
Summary
225
8.1.1
World hydro energy resources and market
225
8.1.2
Australias hydro energy resources
225
8.1.3
Key factors in utilising Australias hydro energy resources
225
8.1.4
Australias hydroelectricity market
225
8.2
8.3
8.4
8.5
Outlook to 2030 for Australias geothermal resources and market

7.4.1
226
8.2.1
Definitions
226
8.2.2
Hydroelectricity supply chain
228
8.2.3
World hydroelectricity market
228
Australias hydro energy resources and market
232
8.3.1
Hydro energy resources
232
8.3.2
Hydroelectricity market
233
Outlook to 2030 for Australias hydro energy resources and market
235
8.4.1
235
8.4.2
Outlook for hydroelectricity market
237
References
237
Chapter 9: Wind Energy
239
9.1
239
9.2
9.3
9.4
9.5
Summary
9.1.1
World wind energy resources and market
239
9.1.2
Australias wind energy resources
239
9.1.3
Key factors in utilising Australias wind energy resources
239
9.1.4
Australias wind energy market
240
241
9.2.1
Definitions
241
9.2.2
Wind energy supply chain
241
9.2.3
World wind energy market
242
Australias wind energy resources and market
246
9.3.1
Wind energy resources
246
9.3.2
Wind energy market
247
Outlook to 2030 for Australias wind energy resources and market
248
9.4.1
Key factors influencing the future development of Australias wind resources
248
9.4.2
Outlook for wind energy market
255
References
260
Chapter 10: Solar Energy
261
10.1
Summary
261
10.1.1 World solar energy resources and market
261
10.1.2 Australias solar energy resources
261
10.1.3 Key factors in utilising Australias solar resources
261
10.1.4 Australias solar energy market
262
CONTE NTS
10.2
10.3
10.4
10.5
262
10.2.1 Definitions
262
10.2.2 Solar energy supply chain
264
10.2.3 World solar energy market
264
Australias solar energy resources and market
268
10.3.1 Solar resources
268
10.3.2 Solar energy market
271
274
10.4.1 Key factors influencing the future development of Australias solar energy resources
275
10.4.2 Outlook for solar energy market
277
References
283
Chapter 11: Ocean Energy
285
11.1
285
11.2
11.3
11.4
Summary
11.1.1 World ocean energy resources and market
285
11.1.2 Australias ocean energy resources
285
11.1.3 Key factors in utilising Australias ocean energy resources
285
11.1.4 Australias ocean energy market
286
286
11.2.1 Definitions
286
11.2.2 Ocean energy supply chain
288
11.2.3 World ocean energy market
288
Australias ocean energy resources and market
291
11.3.1 Ocean energy resources
291
11.3.2 Ocean energy market
298
Outlook to 2030 for Australias ocean energy resources and market
298
11.4.1 Key factors influencing the future development of Australias ocean resources
299
11.4.2 Outlook for ocean energy resources
303
11.4.3 Outlook for ocean energy market
303
References
308
Chapter 12: Bioenergy
309
12.1
Summary
309
12.1.1 World bioenergy resources and market
309
12.1.2 Australias bioenergy resources
309
12.1.3 Key factors in utilising Australias bioenergy resources
309
12.1.4 Australias bioenergy market
310
310
12.2.1 Definitions
310
12.2.2 Bioenergy supply chain
311
12.2.3 World bioenergy market
312
Australias bioenergy resources and market
316
12.3.1 Bioenergy resources
316
12.3.2 Bioenergy market
319
322
12.4.1 Key factors influencing the outlook
322
12.4.2 Outlook for bioenergy resources
328
12.4.3 Outlook for bioenergy market
331
References
333
11.5
12.2
12.3
12.4
12.5
xi
Appendices
335
Appendix A: Australian Energy Resource Assessment Terms of Reference
335
Appendix B: Abbreviations and Acronyms
336
Appendix C: Glossary
337
Appendix D: Resource Classification
339
Appendix E: Energy Measurement and Conversion Factors
341
Appendix F: Geological Time Scale and Formation of Australias Major Energy Resources
344
xii
Chapter 1
Executive Summary
1.1 Summary
KEy mESSagES

This national assessment of Australias energy resources examines Australias identified

and potential energy resources ranging from fossil fuels and uranium to renewables.
It reviews and assesses the factors likely to influence the use of Australias energy
resources to 2030 including the technologies being developed to extract energy more
efficiently and cleanly from existing and new energy sources.
Australia has an abundance and diversity of energy resources. Australia has more than
one third of the worlds known economic uranium resources, very large coal (black and
brown) resources that underpin exports and low-cost domestic electricity production,
and substantial conventional gas and coal seam gas resources. This globally significant
resource base is capable of meeting both domestic and increased export demand for coal
and gas, and uranium exports, over the next 20 years and beyond. There is good potential
for further growth of the resource base through new discoveries. Identified resources of
crude oil, condensate and liquefied petroleum gas (LPG) are more limited and Australia is
increasingly reliant on imports for transport fuels.
Australia has a rich diversity of renewable energy resources (wind, solar, geothermal, hydro,
wave, tidal, bioenergy). Except for hydro where the available resource is already mostly
developed and wind energy where use is growing strongly, these resources are largely
undeveloped and could contribute significantly more to Australias future energy supply.
Greater use of many energy sources with lower greenhouse gas emissions (especially
renewable energy sources) is currently limited by the immaturity of technologies and
the cost of electricity production. Advances in technology supported by industry and
government actions are expected to result in commercial electricity production by 2030
from sources that are currently only at the demonstration stage.
Australias energy usage in 2030 is expected to differ significantly from that of today
under the influence of the 20 per cent Renewable Energy Target and other government
policies such as the proposed emissions reduction target. In addition the Government has
established the Clean Energy Initiative which includes Carbon Capture and Storage and
Solar Flagship Programs, and the Australian Centre for Renewable Energy.
Australias long-term energy projections show total energy production nearly doubling due
to strong export demand, primary energy consumption rising by 35 per cent, and electricity
demand increasing by nearly 50 per cent by 2030. Whilst coal is expected to continue to
dominate Australias electricity generation, a shift to lower-emissions fuels is expected to
result in a significant reduction in coals share and increases in gas and renewable energy,
particularly wind.
Australias energy infrastructure is concentrated in areas where energy consumption is

highest and major fossil fuel energy resources are located. Greater use of new energy
resources, particularly renewable energy sources, will require expansion of Australias
energy infrastructure, including augmentation of the electricity transmission grid.
1.2 Introduction
Australias abundance of energy is a key contributor
to Australias economic prosperity. The Australian
energy sector directly accounts for 5 per cent of
gross industry value-added; 20 per cent of total
export value; supports a large range of manufacturing
industries; and provides significant employment and
infrastructure. The demand for energy is increasing
as Australias economy and population grow.
A secure supply of adequate, clean, reliable
energy at an affordable price is vital for Australias
economic growth and prosperity. To date Australias
energy needs have been largely met by fossil fuels.
Australias abundant and low-cost coal resources
are used to generate three-quarters of domestic
electricity and underpin some of the cheapest
electricity in the world. Australias transport system is
heavily dependent on oil, some of which is imported.
Australias economy, and the energy sector in

particular, is undergoing transformational change to
reduce greenhouse gas emissions and help mitigate
the impacts of global climate change. The energy
sector currently accounts for more than half of
Australias net carbon dioxide (CO2) emissions.
The move to a lower emissions economy requires
a shift from the current heavy dependence on
fossil fuels to a greater use of energy sources and
technologies that reduce carbon emissions, such as
renewable energy and carbon capture and storage.
At present renewable energy sources account for only
modest proportions of Australias primary energy
consumption (around 5 per cent) and electricity
generation (7 per cent), although their use has been
increasing strongly in recent years. Recent and
proposed developments in Australias energy policy
seek to significantly boost the role that renewable
energy plays in the next two decades.
The object of this report by Geoscience Australia and
the Australian Bureau of Agricultural and Resource
Economics (ABARE) is to provide a comprehensive
and integrated assessment of Australias energy
resources to assist industry investment decisionmaking and development of government policy on
energy resources. Included in the outlook to 2030 is
an assessment of Australias identified and potential
energy resources; a review of the technologies being
developed to extract energy more efficiently and
cleanly from both existing and emerging renewable
energy sources; and consideration of other factors
such as the global energy market that are likely to
influence the development and use of Australias
energy resources in the next 20 years.
The assessment is made against a background of
significant change and uncertainty about future
energy demand and use, both in Australia and

globally. World economies including Australia and
its major trading partners are still recovering from
the economic downturn associated with the global
financial crisis in 200809. Preliminary International
Energy Agency (IEA) data suggest that world energy
demand dipped by up to 2 per cent in 2009, the first
decline in energy consumption since 1981.
The rate of growth of future global energy demand is
uncertain and will strongly depend on global policies
and actions to reduce CO2 levels in the Earths
atmosphere. Without such actions, global energy
demand is expected to continue to grow robustly
over the next twenty years, dominated by fossil
fuels. The adoption of emissions reduction policies
could be expected to constrain growth in energy
demand and raise the price of fossil fuels, increasing
the attractiveness of lower carbon technologies,
especially renewable energy.
As the global economy recovers and energy demand
grows, the response by governments in Australia
and globally to climate change will largely determine
future energy demand. This in turn will impact on
demand for Australias energy resources both as
exports to the world markets and the nature of
Australias domestic energy consumption.
1.3 Australia in the world

energy market
Australia is richly endowed with natural energy
resources and holds an estimated 38 per cent
of uranium resources, 9 per cent of coal
resources, and 2 per cent of natural gas
resources in the world.
Australia produces about 2.4 per cent of world
energy and is a major supplier of energy to world
markets, exporting more than three-quarters
of its energy output. In 200809 Australias
energy exports reached nearly 14 000 PJ, worth
$77.9 billion.
Australia is currently the worlds largest exporter
of coal and coal exports accounted for more
than half of exports on an energy content basis.
Australia is one of the worlds largest exporters
of uranium, and is ranked sixth in terms of
liquefied natural gas (LNG) exports. In contrast,
Australia has only about 0.3 per cent of world oil
reserves. Net imports of liquid fuels account for
nearly half of consumption.
Australia is the worlds twentieth largest
consumer of energy, and fifteenth in terms of
per capita energy use.
C H A P T E R 1 : E XE C U TI VE SUMMAR Y
Australias energy market differs from that

of many other OECD countries and world
energy markets. Coal plays a much larger
role in Australias primary fuel mix, reflecting
Australias large, low-cost resources located
near demand centres and close to the eastern
seaboard. The penetration of gas in Australia is
similar to that of the OECD and world average,
as is that of wind and solar. On the other hand,
Australia has less hydro energy resources,
makes less use of bioenergy than some
countries, and does not use nuclear power.
120
1.4 Australias energy

resources and market
Australias energy production was 17 360 PJ in
200708. The main energy sources produced,
on an energy content basis, were coal (54 per
cent), uranium (27 per cent) and gas (11 per
cent). Renewable energy accounts for nearly 2
per cent of total production.
Primary energy consumption was 5772 PJ in
200708. Coal accounted for around 40 per cent
of this, followed by oil (34 per cent) and gas
130
140
150
Bonaparte Basin
10
DARWIN
Browse Basin
Carnarvon Basin
Bowen Basin
Galilee Basin
Callide Basin
Cooper-Eromanga Basin
Arckaringa Basin
Tarong Basin
BRISBANE
Surat Basin
Ipswich Basin
Clarence-Moreton
Basin
30
Gunnedah
Basin
Perth Basin
PERTH
Collie Basin
ADELAIDE
Resource type
Demonstrated resources (PJ)
Uranium
Black Coal
Brown Coal
Conventional Gas
Coal Seam Gas
Oil (crude, condensate,
LPG)
Tidal energy (total annual tide
kinetic energy 1 GJ/m 2 )
Wave energy (total annual
wave energy 0.5 TJ/m)
Wind energy (average wind
speed > 7 m/s)
20
Murray Basin
SYDNEY
Sydney Basin
MELBOURNE
Gippsland Basin
2000 - 10 000
10 001- 25 000
40
HOBART
25 001 - 50 000
50 001 - 100 000
100 001 - 250 000
Basin type
Major energy basin
250 001 - 500 000

>500 000
0
750 km
50
Solar energy (> 14 MJ/m 2

per day)
Geothermal energy (> 3 km of sediment
and/or hotter than 200 oC at 5 km)
AERA 1.1
Figure 1.1 Australias major energy resources, excluding hydro and bioenergy
Note: Total resources are in many cases significantly larger than the remaining demonstrated resources which do not include inferred and
potential (yet to be discovered) resources.
Source: Geoscience Australia
(22 per cent). Renewable energy accounts for 5

per cent of primary energy consumption, most of
which is bioenergy. Wind and solar account for
only 0.3 per cent of primary energy consumption.
Total electricity production was around 925 PJ
(257 TWh) in 200708. Coal accounts for about
three-quarters of Australias electricity generation,
followed by gas (16 per cent). Renewable energy
sources account for an estimated 7 per cent of
electricity generation, most of which is hydro.
Australia has abundant, high quality fossil
fuel resources, notably coal (black and brown)
and gas (conventional, coal seam gas and
potentially tight gas) resources which are widely
distributed across the country (table 1.1; figure
1.1). Resources of oil (crude oil, condensate,
and LPG) are more limited (especially crude oil
resources), and Australia relies increasingly on
imports to meet demand for transport fuels.
With the exception of crude oil, Australias fossil
fuel resources are expected to last for many
more decades, even with increased levels
of production.
Coal is Australias largest energy resource.

About 70 per cent of Australias large, low-cost
economic demonstrated resources (EDR) of black
coal (883 400 PJ, 39 Mt) are located in the
Sydney and Bowen basins but the total identified
coal resource is much larger (about 2.5 million PJ,
114 Gt) and more broadly distributed and includes
major undeveloped resources in additional areas
such as the Gunnedah, Arckaringa, Surat and
Galilee basins in Queensland, South Australia
and New South Wales. Australias EDR of black
coal are sufficient for about 90 years at 2008
production levels. Australia is the worlds largest
exporter of metallurgical coal and the second
largest exporter of thermal coal, with total coal
exports worth $54.7 billion in 200809.
Brown coal resources are even larger and
concentrated in the Gippsland Basin where they
are used for electricity generation. There are also
substantial undeveloped resources in the Murray
Basin. Australias EDR of brown coal are sufficient
for nearly 500 years at 2008 production levels.
Australia has the worlds largest uranium
resources with reasonably assured resources
of uranium recoverable at less than US$80/ kg
(equivalent to EDR) estimated to be 651 280 PJ
(1163 kt U), equivalent to about 140 years at
2008 production levels. High levels of exploration
are expected to add to the resource base.
Australia is one the worlds leading exporters
of uranium and has a number of proposed new
mines to meet increasing world demand. Australia
also has a major share of the worlds thorium

resources, a potential future nuclear fuel.
Gas is Australias third largest energy resource.
Australias has significant conventional gas
resources lying mostly offshore in the Carnarvon,
Browse and Bonaparte basins off the northwest coast of Western Australia with smaller
resources in south-east (Gippsland Basin) and
central Australia. These support growing domestic
demand in the three gas markets as well as
LNG exports (15.4 Mt, $10.1 billion in 2008
09) from Western Australia and the Northern
Territory. Current demonstrated (economic and
sub-economic) resources of conventional gas
stand at 180 400 PJ (164 tcf) are adequate for
63 years at current rates of production. These
figures do not include the gas resources in recent
discoveries which are not yet fully defined, the
resources likely to be added by reserves growth
nor resources from potential new discoveries.
Significant additional export capacity is also under
construction and proposed.
Australia also has significant unconventional
gas resources, especially coal seam gas (CSG)
resources associated with the major coal
basins of eastern Australia. CSG resources and
production have grown strongly and CSG is playing
an increasingly important role in eastern gas
markets. CSG EDR are estimated to be 16 590
PJ but total demonstrated resources exceed
46 590 PJ with more likely to be available from
the even larger estimated potential in-ground CSG
resources. Plans have been announced for CSGbased LNG projects in Queensland.
Australias oil resources are in decline with
remaining crude oil resources estimated to be
8414 PJ (1431 million barrels, mmbbl) and
located mostly in the Carnarvon and Gippsland
basins. Australias total liquid petroleum
resources are boosted to 30 794 PJ by the
condensate (16 170 PJ, 2750 mmbbl) and LPG
(6210 PJ, 1475 mmbbl) resources associated
with major, largely undeveloped gas fields in the
Carnarvon, Browse and Bonaparte basins off
the north-west coast of Australia. Australias oil
resources could be extended by new discoveries
in deep water basins (both proven and untested)
and further growth at existing fields. Without
significant new discoveries of crude oil, or
development of condensate and LPG resources
associated with offshore gas resources, or other
alternatives, Australia is likely to be increasingly
dependent on imports for transport fuels.
Australia also has significant demonstrated
shale oil resources of around 84 600 PJ
(14 387 mmbbl) that are currently not utilised
because of economic and environmental

constraints.
Australias potential renewable resource base
is also very large, and includes wind, solar,
bioenergy, geothermal, wave and tide as well as
hydro resources. Hydro and increasingly wind
energy are used in electricity generation. Biomass
and solar energy are both being used for heating
and electricity generation. However, Australias
renewable energy resources are largely
undeveloped: a number involve technologies
still at the proof-of-concept or early stages of
commercial demonstration.
Australias hydro electric power stations have
a combined installed capacity of 7.8 GW and
produce about 4.5 per cent of Australias
total electricity, the largest contribution of any
renewable energy. Most are located in Tasmania
and in the Snowy Mountain Hydro-Electric Scheme
in south-east Australia where they account for
about 60 per cent and 20 per cent of electricity
generation in Tasmania and New South Wales,
respectively. However, water availability is a
key constraint on future growth in hydro energy
in Australia.
Australias wind resources are among the best
in the world, primarily located in western, southwestern, southern and south-eastern coastal
regions but extending hundreds of kilometres
inland. These resources are being progressively
utilised by an increasing number of large-scale
(more than 100 MW) wind farms using large
modern wind turbines. Wind energy is the fastestgrowing energy source with an installed capacity
of about 1.7 GW, which produced about 1.5 per
cent of Australias electricity in 200708.
High solar radiation levels over large areas
of the continent provide Australia with some
of the best solar resources in the world. Use
of solar energy is currently modest (around
0.1 per cent of Australias primary energy
consumption) consisting mainly of off-grid and
residential installations using solar thermal water
heating with lesser production of electricity from
photovoltaic (PV) cells. Substantial research
and development programs in both government
and industry are aimed at developing and
commercialising large scale solar energy.
Australia has significant (Hot Rock) geothermal
energy potential associated with buried heatproducing (from natural radioactive decay)
granites that could be a source of low
emissions base load electricity generation.
Lower temperature geothermal resources are
associated with naturally-circulating waters in
aquifers deep in sedimentary basins and are

potentially suitable for electricity generation
and/or direct use. Several projects are at the
exploration, proof-of-concept or early commercial
demonstration stage. Potential also exists for
use of ground source heat pumps in heating and
cooling buildings.
Ocean energy (wave and tidal) is a potential new
source of energy. Australia has a world-class
wave energy potential along its south-western
and southern coast with high energy densities,
and large areas experiencing constant favourable
wave heights (exceeding 1 m). Australia also has
significant tidal energy resources, including an
average kinetic energy resource of around 2.4
PJ at any time, located mostly along Australias
northern coastline. A number of technologies are
being trialled at various sites.
Bioenergy is a diverse energy source based on
biomass (organic matter) that can be used to
generate heat and electricity and to produce liquid
transport fuels. Bioenergy currently accounts for
about 4 per cent of Australias primary energy
consumption with the biggest contributors being
bagasse (sugar cane residue) and woodwaste
in heating and electricity generation with some
capture of methane gas from landfill and
sewage facilities. A small amount of transport
fuel (ethanol and biodiesel) is also produced.
Greater use of bioenergy could be made through
increased use of agricultural residues and
wastes, wood waste, and non-edible biomass,
including new generation crops.
Current impediments to immediate large scale
utilisation of Australias substantial and diverse
renewable resources include their generally higher
costs relative to other energy sources (except for
hydro), their often remote location from markets
and infrastructure, and the relative immaturity
(except for wind) of many renewable technologies.
1.5 Outlook for Australias

energy resources and market
to 2030
Significant changes are anticipated in the
Australian energy market over the next two
decades as a consequence of the expanded
Renewable Energy Target (RET) and other
government policies. Other factors expected to
affect the market include the rate of economic
and population growth, energy prices, and
costs and developments in alternative energy
technologies. Domestic use of nuclear power is
not considered in the outlook period.
Technology is expected to play a critical role in

the transition toward a lower emissions economy.
This includes technology to improve efficiency
in extraction and use of energy, to reduce costs
of cleaner technologies, and to develop and
commercialise new technologies to access new
energy sources.
Australias energy demand will continue to rise
over the period to 2030, but the rate of growth
is expected to continue to slow. This reflects
the long term trend in the Australian economy
toward less energy intensive sectors, and energy
efficiency improvements both of which can be
expected to be reinforced by policy responses
to climate change. The contribution of gas and
renewables is expected to increase significantly.
ABAREs latest long-term Australian energy
projections examine the effects of a 5 per cent
emissions reduction target below 2000 levels
by 2020, combined with the RET (20 per cent
of electricity supply by 2020) and other existing
policy measures, on Australias energy market.
Australias total energy production (including
uranium exports), is projected to increase by
3.2 per cent per year to reach around 35 057 PJ
by 202930.
6
Australias primary energy consumption is

projected to increase by 1.4 per cent per year to
reach around 7715 PJ by 202930. The primary
fuel mix is expected to change significantly, with
the share of coal expected to decline to 23 per
cent by 202930. In contrast, the share of gas is
expected to rise to 33 per cent and wind to 2 per
cent. Renewable energy is projected to account
for 8 per cent of Australian energy consumption
by 202930.
Electricity generation is projected to reach
366 TWh in 202930, an increase of 1.8 per
cent per year. Coal is expected to continue to
dominate Australias electricity generation
(43 per cent of total in 202930) but a shift to
lower emissions energy sources is expected to
result in significant increases in the use of gas
(37 per cent) and renewables (19 per cent),
particularly wind (12 per cent).
Australias energy infrastructure is concentrated
in areas where energy consumption is highest
and major fossil fuel energy resources are
located, particularly along the eastern seaboard
of Australia. A significant expansion in Australias
energy infrastructure, particularly electricity
generation and transmission, will be required
in the next two decades if Australia is to meet

its changing demand for energy. Utilising new
energy resources, particularly renewable
energy sources, will require a more flexible and
decentralised electricity transmission grid.
Australias energy exports are projected to
continue to grow to 2030 to meet rising global
demand for energy. Net energy trade is projected
to increase by 3.9 per cent per year, to reach
27 340 PJ in 202930. Exports of coal, uranium
and LNG are all expected to rise significantly.
World primary energy demand is projected to
increase by 40 per cent between 2007 and
2030, representing an average annual growth
rate of 1.5 per cent, in the IEA 2009 World
Energy Outlook reference scenario. More than
three-quarters of the increase in primary energy
demand will continue to be for fossil fuels.
Of the fossil fuels, coal is expected to be the
fastest growing fuel and is projected to account
for 29 per cent of world primary energy demand
in 2030 (slightly higher than its current share),
followed by gas which is projected to maintain its
current share of 21 per cent. Renewable energy
sources are projected to account for 14 per cent
of primary energy use in 2030.
Under a scenario where countries adopt
emission reduction policies to stabilise the
concentration of greenhouse gas emissions
in the atmosphere at 450 parts per million of
CO2-equivalent (the IEAs 450 scenario), growth
in world energy demand to 2030 is projected
to be significantly constrained, rising by only 20
per cent on current levels. Lower demand for
coal would see the share of coal in the primary
energy mix fall sharply (to 18 per cent in 2030).
Renewable energy and nuclear power drive much
of the growth in energy demand, with the share
of renewables in primary energy use to rise more
sharply (to 22 per cent).
The energy sector, especially fossil fuels,
will continue to play an important role in the
Australian economy both in terms of domestic
energy supply and increasingly in exports.
However, it is clear that the transition to a low
carbon economy will require long term structural
adjustment in the Australian energy sector.
While Australia has an abundance of energy
resources, this transformation will need to be
underpinned by significant investment in energy
supply chains to allow for better integration
of renewable energy sources and emerging
technologies into our energy systems.
Table 1.1 Summary of Australias energy resources, December 2008

Resource
Development
Economic
Total
status
demonstrated demonstrated
resources
resources
PJ
PJ
Production
200708
PJ
Installed
electricity
generation
capacity
gW
Electricity
production
200708
TWh
Export value
200809
$million
Non-renewable energy resources

Black coal
Electricity
generation,
exports of
thermal and
metallurgical
coal
883 400
1 046 500
8722
24
143
54 671
Uraniuma
Exports
651 280
660 240
4747
990
Electricity
generation
362 000
896 300
709
6.7
60
Conventional
gas
Electricity
generation,
direct use,
LNG exports
122 100
180 400
1709
14
42
(includes
CSG)
10 086
Coal seam
gas (CSG)
Electricity
generation,
direct use,
proposed
LNG exports
16 590
46 590
124
Included in
conventional
gas
Included in
conventional
gas
Condensate
Transport
fuel
12 560
16 170
257
Included in
crude oil
Crude oil
Transport
fuel
6950
8414
697
1
(distillate)
8755
(-5966 net
exports)
LPG
Transport
fuel
4614
6210
105
1044
Oil shale
Undeveloped
resource
Economic
evaluation of
resources in
progress
84 600
Thoriuma, b
Undeveloped
potential
resource
No
commercial
market at
present
76 kt
Exceeds
2 572 280c
0.003d
0.08
0.0007d
100 TWh/
yeare
(technically
exploitable
capacity)
43
7.8
12
Brown coal
Renewable resources
Geothermal
Hydro
Undeveloped
Economic
large Hot
evaluation
Rock and Hot dependent on
Sedimentary demonstration
Aquifer
projects in
resources,
progress
not fully
defined
Electricity
generation;
resource
largely
developed
30 TWh/
yeare (gross
economically
exploitable
capacity)
Resource
Development
Economic
Total
status
demonstrated demonstrated
resources
resources
PJ
PJ
Production
200708
PJ
Installed
electricity
generation
capacity
gW
Electricity
production
200708
TWh
Export value
200809
$million
Wind
Electricity
generation;
large
potential
resources
Substantial
economic
resource,
large-scale
commercial
wind farms
in operation
More than
600 000 km2
with average
wind speeds
of 7 m/s
or higher
14
1.7
3.9
Solar
Large
potential
resources.
Solar heating
and (off-grid)
solar PV
electricity
generation
Large-scale
solar power
stations
under
research and
development
Average solar
radiation
per year
58 million PJ
0.1
0.1
Ocean Energy
(Wave and
tidal)
Large
Economic
undeveloped
evaluation
resources,
dependent on
demonstration demonstration
projects in
projects in
process
progress
Average total
tidal kinetic
energy at
any time on
continental
shelf
2.42 PJ
Average
total wave
energy at
any time on
continental
shelf
3.47 PJ
0.0008
Bioenergy
Significant
Commercial
Bagasse,
under-utilised production of wood waste,
resources, electricity and sewage gas,
potential new
heat from
land-fill gas,
resources
bagasse,
forest and
biogas
agricultural
and other
residues, and
biomass.
energy crops
Commercial
production of
biofuels
226
0.9
2.2
Biofuels
199 ML
a Recoverable at <US$ 80/kg. b A conversion into energy content equivalent for thorium was not available at the time of publication.
c Total identified geothermal energy resources potentially available (including inferred resources), actual amount available depends on
efficiency of extraction. d 200607 production. e World Energy Council, 2007, Survey of Energy Resources 2007
Note: Economic and total demonstrated resources for fossil fuels, uranium, thorium and geothermal based on McKelvey resource
classification; not applied to renewable energy sources other than geothermal. Total resources are in many cases significantly larger
than the remaining demonstrated resources which do not include inferred and potential (yet to be discovered) resources.
Source: Geoscience Australia; ABARE 2009, Australian Energy Statistics
Chapter 2
Australias Energy Resources

and Market
2.1 Summary
KEy MEssAgEs

Australia has a large, diverse energy resource base (including fossil fuels, energy minerals and
renewables) that supports domestic consumption and exports to many countries.
Australias very large low-cost coal resources underpin cheap reliable electricity and exports
of thermal and metallurgical coal. Australia exports uranium from its substantial resource base,
and gas is used domestically and increasingly exported as LNG. However, Australia has only
limited crude oil resources and is increasingly reliant on imports for its transport fuels.
Australia has significant and widely distributed wind, solar, geothermal, ocean energy and
bioenergy sources which, with the exception of wind which is now being rapidly exploited,
are largely undeveloped. Hydro resources are largely developed.
Australias energy resource base could increase further over the next two decades as more
resources are discovered and technology to harness and economically use energy improves.
Demand for Australian energy resources continues to rise, both domestically and for export.
However, the energy intensity of the Australian economy is expected to continue to fall over the
period to 2030 through further efficiency gains and other adjustments.
The role of renewable energy is likely to increase significantly, reflecting government policies such
as the Renewable Energy Target and other government policies and actions such as the proposed
emissions reduction target and the Clean Energy Initiative, which includes Carbon Capture and
Storage and Solar Flagship Programs, and the Australian Centre for Renewable Energy. Advances
in renewable energy technologies will also be important.
Significant investment in energy resources and infrastructure will be required over the next two
decades to meet Australias domestic and export market needs.
2.1.1 Australia in the world energy market

Australia is the worlds twentieth largest
consumer of energy, and fifteenth in terms of
per capita energy use.
Australias large resource endowment and
comparative advantages enable it to play an
important role in supplying the rest of the world
with its energy needs.
Australia is currently the worlds largest exporter
of coal, one of the largest uranium exporters,
and is ranked sixth in terms of Liquefied Natural
Gas (LNG) exports.
Australia holds an estimated 38 per cent of
world uranium resources, 9 per cent of world
coal resources, and 2 per cent of world natural
gas resources.
Australia also has substantial renewable energy
resources including solar, wind, wave, geothermal
and bioenergy resources.
Australias energy fuel mix is dominated by
coal, reflecting our large, low-cost resources.
Our energy market therefore differs from those
of many other Organisation for Economic Cooperation and Development (OECD) countries
and the world energy market where coal is less
significant and hydro and nuclear energy are
significant contributors to the fuel mix.
The penetration of gas in Australia is similar to
that of the OECD and world average, as is that
of wind and solar.
In its 2009 World Energy Outlook reference
scenario, the International Energy Agency (IEA)
projects world primary energy demand to increase
by 40 per cent between 2007 and 2030 (from
around 502 960 petajoules (PJ) to around 702
920 PJ). This represents an average annual
growth rate of 1.5 per cent.
China and India are expected to account for more
than half of the increase in world primary energy
demand during this period, driven by continuing
strong economic growth.
More than three-quarters of the increase in
primary energy demand in the reference scenario
is projected to be for fossil fuels. Of the fossil
fuels, coal is expected to be the fastest growing
fuel, followed by gas. Coal is projected to account

for 29 per cent of world primary energy demand
in 2030, with gas maintaining its current share of
21 per cent.
Renewable energy demand is also expected to
rise rapidly, though from a much smaller base.
Renewables are projected to account for 14 per
cent of world primary energy demand in 2030.
Wind will drive much of the growth in renewable
energy, although demand for hydro, bioenergy and
solar energy will also increase significantly.
The IEA also presents projections for world energy
demand if economies adopt emissions reduction
policies to stabilise the concentration of greenhouse
gas emissions in the atmosphere at 450 parts
per million of carbon dioxide (CO2) equivalent.
Under this 450 scenario, growth in world energy
demand to 2030 is significantly constrained,
projected to rise by only 20 per cent on current
levels. The share of coal in the primary energy
mix is projected to fall sharply to 18 per cent in
2030. In contrast, the share of renewable energy
is projected to rise to 22 per cent in that year.
This reflects the increased competitiveness of
renewable technologies relative to coal with the
introduction of carbon pricing.
10
2.1.2 Australias energy resources

and infrastructure
Australia has abundant, high quality energy
resources, widely distributed across the country.
With the exception of oil, these resources are
expected to last for many more decades, even as
production increases.
The fossil fuel resources available to Australia
include coal (black and brown), gas (conventional,
coal seam gas (CSG) and potentially tight gas)
and oil (crude oil, liquefied petroleum gas (LPG),
condensate and shale oil).
However, Australia has only limited domestic

supplies of crude oil, and relies increasingly on
imports to meet demand.
As of December 2008, Australias economic
demonstrated resources (EDR) of coal are
estimated to be 1.25 million PJ, of which black
coal are 883 400 PJ (figure 2.1a). Conventional
gas EDR are estimated to be 122 100 PJ, and
coal seam gas 16 590 PJ. Crude oil EDR are
estimated to be 6950 PJ, condensate 12 560 PJ
and LPG 4610 PJ.
Australia also has extensive uranium and
thorium resources. Australias reasonably
assured resources of uranium recoverable at
less than US$80/kg (equivalent to EDR) are
estimated to be 651 280 PJ as of December
2008. Australia also has a major share of the
worlds thorium resources.
Australias potential renewable resource base
is also very large. This includes some of the
best solar resources in the world and significant
(Hot Rock) geothermal energy potential,
associated with buried radiogenic granites.
Australias wind resources are also among the
best in the world, primarily located in western,
south-western, southern and south-eastern
a) Economic demonstrated resources
coastal regions but extending hundreds of
kilometres
inland. Australia also has a world-class
Black coal
wave energy potential along its south-western and
Uranium
southern coast.
Brown coal
There is also is significant potential to increase

Conventional
thegasimportance of bioenergy in Australia through
greater
use of biomass and greater production of
Coal seam
gas
for use in transport.
Crudebiofuels
oil and
condensate
While hydro energy currently accounts for the

LPG
major share of Australias renewable electricity
Shale
oil
generation,
water availability limits any significant
expansion.
0
300 000
600 000
900 000
PJ
a) Economic demonstrated resources
b) Renewable electricity generation capacity
Black coal
Hydro
Uranium
Wind
Brown coal
Biomass
Conventional gas
Biogas
Coal seam gas
Solar
Crude oil and

condensate
Other
LPG
Geothermal
Shale oil
Ocean
0
300 000
600 000
PJ
900 000
AERA 2.1
2000
4000
6000
8000
MW (installed)
Figure 2.1 Australias energy resources in terms of economic demonstrated resources of non-renewable resources
and installed renewable
electricity
generation
b) Renewable
electricity
generationcapacity
capacity
source: Geoscience Australia 2009a, b, c
Hydro
Wind
Biomass
Biogas
AUSTRA L I AN E N ESolar
R GY R E S O U R C E A S S E S S M E NT
C H A P T E R 2 : AU S TR A LI AS E N E R G Y R E S O U R C E S AND MAR KET
There are currently some impediments to

large-scale utilisation of Australias renewable
resources, including the generally higher costs
relative to other energy sources, their often
remote location from markets and infrastructure,
and the relative immaturity (except for wind) of
many renewable technologies.
Most of Australias installed renewable electricity
generation capacity is hydro and wind energy
(figure 2.1b). The next largest are bioenergy
(biomass and biogas) and solar. Australia has
significant geothermal and wave energy resources
but these industries are currently at pilot and
demonstration stage and not yet commercial.
Energy infrastructure is concentrated in areas
where energy consumption is highest and major
energy resources are located, particularly along
the eastern seaboard of Australia.
A significant expansion in Australias energy
infrastructure particularly electricity generation
and transmission will be required in the next
two decades if Australia is to meet its demand
for energy. Utilising new energy resources,
particularly renewable energy sources, will require
a more flexible and decentralised electricity grid.
2.1.3 Australias energy market to 2030

The energy sector plays an important role in
Australias economy. It accounts for around
5 per cent of industry gross value added, and
20 per cent of total export value. It also provides
significant employment and infrastructure, and
supports a range of manufacturing industries.
Australias energy production was 17 360 PJ in
200708. The main energy sources produced,
on an energy content basis, are coal (54 per
a) 2007-08 (5772 PJ)
Total electricity production was around 925 PJ

(257 TWh) in 200708. Coal accounts for more
than three-quarters of Australias electricity
generation, followed by gas (16 per cent).
Renewables account for an estimated 7 per cent
a) 2007-08 (5772 PJ)
of electricity generation,
most of which is hydro.
Solar
Wind
0.1%
0.2%
Australia exports
moreBioenergy
than three-quarters of
3.9%
its energy
production, with
exports of 13559PJ
Hydro
0.8%
in 200708, at a value of $45.6 billion. In
200809, the value of energy exports increased
to $77.9billion, supported by higher world prices.
Coal accounted
Gas for more than half of exports
21.6%
on an energy
content basis, followed by uranium
Coalimports more
(35 per cent). In contrast, Australia
39.7%
than three-quarters of its oil requirements.
Major changes are anticipated in the Australian
energy market overOilthe next two decades,
33.6%initiatives, including the
reflecting new policy
expanded Renewable Energy Target (RET) and
a proposed emissions reduction target.
Other factors expected to affect the market
include the rate of economic and population
Solar
0.3%
Bioenergy
3.9%
Hydro
0.8%
Primary energy consumption was 5772 PJ in

200708. Coal accounts for around 40 per
cent of this total, followed by oil (34 per cent)
and gas (22 per cent) (figure 2.2a). Renewable
energy accounts for 5 per cent of primary energy
consumption, most of which is bioenergy. Wind
and solar account for only 0.3 per cent of primary
energy consumption.
b) 2029-30 (7715 PJ)
Solar
0.1%
Wind
0.2%
cent), uranium (27 per cent) and gas (11 per

cent). Renewable energy accounts for nearly
2 per cent of total production.
Wind
2.1%
Hydro
0.6%
Bioenergy
4.4% Geothermal
0.3%
Coal
22.8%
Gas
21.6%
Coal
39.7%
Gas
33.4%
Oil
36.1%
Oil
33.6%
AERA 2.2
Figure 2.2 Australias primary energy consumption, 200708 and 202930

Source: ABARE 2009a, 2010. See box 2.2 for further details on sources
b) 2029-30 (7715 PJ)

Solar
0.3%
Wind
2.1%
Hydro
Bioenergy
4.4% Geothermal
0.3%
11
growth, energy prices, and costs and

developments in alternative energy technologies.
Technology is expected to play a critical role in

the transition to a low emissions economy. This
includes the development and commercialisation
of new technology to improve efficiency in
extraction and use of energy, facilitate the use
of new fuel sources and reduce the emissions
intensity of the sector.
While Australias energy demand is expected
to rise over the period to 2030, the rate of
growth is expected to continue to slow. This is
partly because of expected energy efficiency
improvements, but more importantly because of
the response to climate change and higher energy
prices. The contribution of gas and renewables is
expected to increase significantly.
ABAREs latest long-term Australian energy
projections examine the effects of a 5 per cent
emissions reduction target below 2000 levels
by 2020, combined with the RET (20 per cent
of electricity supply by 2020) and other existing
policy measures, on Australias energy market.
12
Australias total energy production is projected

to increase by 3.2 per cent per year to reach
around 35 057 PJ by 202930. The share of
gas, uranium and renewables in total energy
production is projected to increase. The share of
coal is projected to fall, although coal production
is still projected to increase as a result of strong
export demand.
Australias primary energy consumption is
projected to increase by 1.4 per cent per year to
reach around 7715 PJ by 202930. The primary
fuel mix is expected to change significantly (figure
2.2b). The share of coal is expected to decline
to 23 per cent by 202930. In contrast, gas is
expected to rise to 33 per cent and wind to 2 per
cent. Renewable energy is projected to account
for 8 per cent of Australian energy consumption
by 202930.
Electricity generation is projected to reach
366TWh in 202930, an increase of 1.8 per
cent per year. Coal is expected to continue to
dominate the electricity fuel mix (43 per cent in
202930), but emission pricing will lead to a
trend away from higher-emission energy sources
towards gas (37 per cent) and renewables (19 per
cent), particularly wind (12 per cent).
Net energy trade is projected to increase by
3.9 per cent per year, to reach 27 342 PJ in
202930. Exports of coal, uranium and LNG are
all expected to rise significantly, to meet growing
world energy requirements. Net imports of liquid
fuels are projected to increase at an average

rate of 3.3 per cent per year, reflecting declining
oil production.
2.2 Australia in the world

energy market
Australia has a large and diverse energy resource
endowment with comparative advantages that enable
it to play an important role in supplying the rest of
the world with its energy needs (figure 2.3). Australia
is currently the worlds largest coal and one of the
largest uranium exporters, and is ranked sixth in
terms of LNG exports.
Australias energy market differs from a number of
other OECD and world energy markets. Coal plays a
much larger role in Australias fuel mix, reflecting our
large, low cost reserves. Nuclear and hydro power
are significant contributors to the energy mix in a
number of OECD countries. The penetration of gas in
the Australian energy market is similar to that of the
OECD and world average, which is also the case for
wind and solar.
This section provides a brief overview of the world
energy market and the role of Australia, as well as
some comparisons between the Australian, OECD
and world markets. It also summarises the latest
outlook for the world energy market released by
the IEA in November 2009. This outlook contains
two scenarios: (1) a reference scenario, which is a
business as usual scenario that predicts how global
energy markets would evolve if governments made no
changes to their existing policies and measures; and
(2) a 450 scenario which presents likely world energy
markets predicated on countries taking collective
policy action to limit the long-term concentration of
greenhouse gases in the atmosphere to 450 parts
per million of CO2-equivalent (IEA 2009b).
40
Resources
30
Production
20
10
0
Coal
Oil
Gas
Uranium
AERA 2.3
Figure 2.3 Australias share of world energy resources

and production, 2008
Source: IEA 2009a; BP 2009
2.2.1 Current world market snapshot
40
Resources and production
35
30
25
Large proved coal reserves are located in the United

States, Russian Federation, China and Australia.
Significant proved crude oil reserves are located
in Saudi Arabia, Iran, Iraq, Kuwait and the United
Arab Emirates while most of the worlds proved
conventional gas reserves are in the Russian
Federation, Iran and Qatar. Australia has the worlds
largest Reasonably Assured Resources (RAR) of
uranium, followed by Kazakhstan and Canada.
In 2007, world energy production was around

499880 PJ. The largest energy producers include
China, the United States, the Russian Federation
and Saudi Arabia. Australia is the worlds ninth
largest energy producer, accounting for 2.4 per cent
of world energy production (IEA 2009a). Australia is
the worlds third largest producer of uranium, fourth
largest producer of coal, and ranked nineteenth in
the world for gas production.
Primary energy consumption

World primary energy consumption increased by
2.6 per cent per year between 2000 and 2007.
The United States (19 per cent), China (16 per cent),
the Russian Federation (6 per cent), India (5 per cent)
and Japan (4 per cent) are the largest energy users.
Australia is the worlds twentieth largest consumer
of energy, and fifteenth in terms of per person energy
use (IEA 2009a).
15
10
5
80
Bioenergy
Geothermal
Wind
Solar
Hydro
Nuclear
Gas
Oil
Coal
b) Fuel mix in electricity generation, 2008
70
60
50
40
30
20
13
10
Australia
OECD
Bioenergy
Geothermal
Wind
Solar
Hydro
Nuclear
Gas
0
Coal
Most countries have some potential for renewable

energy resources, although these resources in
some regions and countries are of higher quality
and more readily accessible than in others. Asia,
Africa and the Americas have the highest potential
for hydroelectricity. Geothermal potential is generally
greatest in countries located near chains of active
volcanoes, however, technological improvements
have made it possible for most countries to use
shallow low temperature geothermal resources.
Solar potential is greatest in the Red Sea area,
including Egypt and Saudi Arabia, while Australia
and the United States also have above average
potential. Locations with the highest wind energy
potential include the coastal regions of western and
southern Australia, New Zealand, southern South
America, South Africa, northern and western Europe,
and the north eastern and western coasts of Canada
and the United States. Some of the coastlines with
the greatest wave energy potential are the western
and southern coasts of South America, South Africa
and Australia.
20
Oil
World energy resources are widely dispersed.

Some countries are well endowed with a single or
multiple energy resources, while others have limited
indigenous energy resources and rely on imports to
meet requirements.
a) Fuel mix in energy consumption, 2008
World
AERA 2.4
Figure 2.4 Fuel mix in primary energy consumption and

electricity generation, 2008
Note: Australian data are for 200708, world data are for 2007
Source: ABARE 2009a; IEA 2009a
Oil is the worlds main energy source, currently

accounting for around 34 per cent of total primary
energy consumption, followed by coal (26 per cent)
and gas with 21 per cent (figure 2.4a). This fuel mix
has been relatively stable over the past decade.
Nuclear accounts for 6 per cent of the primary
energy mix. Renewables account for around 13 per
cent of world energy consumption, most of which
is bioenergy with much smaller contributions from
hydro, geothermal and wind.
Coal plays a more significant role in Australias
energy mix than in other OECD and world energy
markets. Australias dependence on oil is similar to
the world average, while the penetration of gas is
similar to that of the OECD and world average, as is
that of wind and solar. The use of hydro energy and

bioenergy is significantly lower in Australia than in the
world energy market.
IEA reference scenario
Electricity generation
Gross electricity generation has increased by 3.7 per
cent per year since 2000, to reach 19 771 TWh in
2007 (IEA 2009a).
Coal and gas are also the largest sources of global
electricity generation with 42 per cent and 21 per
cent in 2007, respectively (figure 2.4b). Nuclear
power comprises 14 per cent of world and 21 per
cent of OECD electricity production. Renewables
contribute around 18 per cent of electricity
generation, most of which is hydro energy.
Australia relies more heavily on coal for electricity
generation than the world and OECD averages, where
the balance of base load power generation is largely
made up by nuclear and hydro energy. The use of
gas-fired electricity in Australia is slightly lower than
the world and OECD average. However, the share of
wind and solar in Australia is slightly higher than the
world average.
Trade
With a number of energy resources located long
distances from major energy consumers, there has
been considerable growth in world energy trade.
World energy imports have increased by 3.2 per
cent per year since 2000, to account for 39 per cent
of primary energy consumption in 2007. The main
energy exporters include the Russian Federation,
Saudi Arabia and Canada (IEA 2009a).
Australia, with its rich resource endowment, plays
an important role in supplying regional and global
energy demand, particularly for coal and uranium,
and increasingly natural gas (figure 2.5). Australia
is the worlds sixth largest energy exporter overall
Australia is the worlds largest exporter of coal,
one of the largest uranium exporters, and is ranked
sixth in terms of LNG exports.
30
20
14
10
0
Energy
2.2.2 World energy market outlook

to 2030
Coal
LNG
AERA 2.5
Figure 2.5 Australias share of world energy trade, 2008

Source: IEA 2009a. Note that the share of total energy trade is
for 2007
In its 2009 World Energy Outlook reference

scenario, that predicts how global energy markets
would evolve if governments made no changes
to their existing policies and measures, world
primary energy demand is projected to increase by
40 per cent (from around 502 960 PJ to around
702922PJ) between 2007 and 2030 (IEA 2009b;
table 2.1). This represents an average annual
growth rate of 1.5 per cent, with the majority of
this increase expected to be driven by non-OECD
countries.
China and India are expected to account for more
than half of the increase in world primary energy
demand during this period, driven by continuing
strong economic growth. Energy demand in the
Middle East is also projected to grow strongly
over this period.
Global demand for coal is expected to grow by an
average of 1.9 per cent per year between 2007
and 2030, with its share of global energy demand
increasing from 27 per cent in 2007 to 29 per cent
in 2030 (figure 2.6). The majority of this increase
in world coal demand is expected to come from
China and India. China is also projected to account
for nearly two-thirds of the increase in global coal
production over the period. The United States,
India and Australia are expected to remain the
next largest coal producers.
World demand for gas is projected to grow at an
annual average rate of 1.5 per cent during the
outlook period, with its share of world energy use
to remain at 21 per cent in 2030. More than 80 per
cent of the increase in demand is projected to be
from non-OECD countries, particularly the Middle
East. The Middle East and Africa are expected to
account for the largest increases in natural gas
production over the period to 2030. The share
of production worldwide from unconventional gas
sources is projected to expand from 12 per cent
in 2007 to almost 15 per cent in 2030. The share
of LNG in world gas trade is also expected to rise,
from around 34 per cent in 2007 to 40 per cent
in 2030.
The IEA forecasts that the rise in unconventional
gas production, together with slower demand growth
in the medium term, will contribute a glut of gas
supplies in the next few years. This has implications
for prices, as well as energy trade. For instance,
the increasing role of unconventional gas production
in the United States to more than half of total
production is reducing its reliance on imports,
particularly of LNG.

a) 2007 (502 960 PJ)
Other
renewables
0.6%
scenario
Table 2.1 Outlook for world primary energy demand, IEA reference
Hydro
2.2%
2007
2030
2007
2030
Bioenergy
9.8%
PJ
PJ
Coal
133 308
204 609
26.5
29.1
1.9
Oil
171 366
209 717
34.1
29.8
0.9
Nuclear
5.9%
Average annual
growth
20072030
Coal
26.5%
Gas
20.9%
Gas
105 172
149 092
20.9
21.2
1.5
Nuclear
29 684
40 026
5.9
5.7
1.3
Hydro
11 095
16 831
2.2
2.4
Bioenergy
49 237
67 156
9.8
9.6
3098
15 491
0.6
2.2
7.3
502 960
702 922
100.0
100.0
1.5
Other renewables
Total
1.8
Oil
34.1%
1.4
Source: IEA 2009b
b) 2030 (702 922 PJ)
a) 2007 (502 960 PJ)
Other
renewables
2.2%
Other
renewables
0.6%
Hydro
2.2%
Hydro
2.4%
Bioenergy
9.8%
Nuclear
5.9%
Coal
26.5%
Gas
20.9%
Bioenergy
9.6%
Nuclear
5.7%
Coal
29.1%
Gas
21.2%
Oil
34.1%
15
Oil
29.8%
AERA 2.6
Figure 2.6 Outlook for world primary energy demand, IEA reference scenario
Source: IEA 2009b
b) 2030 (702 922 PJ)
Global demand for Other

oil is projected to grow by 0.9
renewables
per cent per year on2.2%
average to 2030. Oil is expected
to continue to dominate the primary fuel mix, but its
share
of world energy use is expected to decline from
Hydro
2.4%cent in 2007
Bioenergy
34 per
to 30 per cent in 2030. Around
9.6%
42 per cent of the global increase in oil demand is
expected to
come from China, followed
by the Middle
Nuclear
Coal
5.7% Most of the increase 29.1%
East and India.
in oil production
over the period is projected to come from OPEC
countries (mainly in the Middle East). The OPEC
share in total oil production is projected to increase
Gas
from an estimated
21.2% 44 per cent in 2008 to 52 per
cent in 2030.
Oil
From 2007 to 2030, the share 29.8%

of nuclear power in
primary energy demand is projected to remain steady
at 6 per cent, with demand to increase by 1.3 per
AERA 2.6
cent per year over this period. Most of the projected
growth in nuclear power is expected to be in China,
with most of the remaining growth occurring in other
Asian countries. Nuclear power capacity in Europe,

however, is projected to decline over the outlook
period. Australia is expected to remain a key provider
of uranium exports to the growing Asian markets.
Globally, renewable technologies are expected to
grow faster than any other energy source between
2007 and 2030, but from a smaller base. Excluding
bioenergy and hydro, renewable energy sources
such as wind, solar, geothermal and wave and tidal
energies are projected to grow at an annual average
rate of 7.3 per cent. The share of these renewables
in total primary energy demand is also expected to
increase from 0.6 per cent in 2007 to 2.2 per cent
in 2030.
World demand for hydro is forecast to grow at an
average annual rate of 1.8 per cent between 2007
and 2030, with its share of world energy demand
remaining constant at 2 per cent. The use of
a) 2007 (19 756 TWh)

Wind
0.9%
Geothermal
0.3%
Bioenergy
1.3%
bioenergy is expected to increase by 1.4 per cent per

year on average during the outlook period, with its
share to remain at just under 10 per cent of primary
energy demand.
World electricity generation is projected to increase
by 2.4 per cent per year, to reach 34 292 TWh by
2030 (table 2.2). The share of coal-fired electricity
is projected to rise to 44 per cent in 2030 (figure
2.7). Other fuels expected to increase their share
of electricity generation by 2030 include wind (to
4.5 per cent), bioenergy (to 2.4 per cent), solar
(to 1.2 per cent), and geothermal (to 0.5 per cent).
In contrast, the shares of oil, nuclear and hydro in
world electricity generation are expected to fall.
a) 2007 (19 756 TWh)
Wind
0.9%
In its latest World Energy Outlook (IEA 2009b),

Hydro
the IEA also presents
15.6% projections for world energy
demand if economies adopt emissions reduction
Coal
policies to stabilise the concentration41.6%
of greenhouse
Nuclear
gas emissions
in the atmosphere at 450 parts per
13.8%
million of CO2-equivalent.
Under this 450 scenario, projected growth in world
Gas is significantly constrained,
energy demand to 2030
20.9%
rising by only 20 per cent on current
levels to reach
Oil
5.7%441 PJ lower than
602481PJ in 2030 (around 100
in the reference scenario). This is equal to average
annual growth of around 0.8 per cent.
b) 2030 (34 292 TWh)

Geothermal
0.3%
Bioenergy
1.3%
IEA 450 scenario
Bioenergy
2.4%
Geothermal
0.5%
Solar
1.2%
Wind
4.5%
Hydro
15.6%
Hydro
13.6%
Coal
41.6%
Nuclear
13.8%
Coal
44.5%
Nuclear
10.7%
16
Gas
20.9%
Gas
20.6%
Oil
5.7%
Oil
1.9%
Figure 2.7 Outlook for world electricity generation, IEA reference scenario
AERA 2.7
Source: IEA 2009b
b) 2030 (34 292 TWh)

Geothermal
Solar
Table 2.2 Outlook for
0.5%world electricity generation, IEA reference scenario
1.2%
Bioenergy
2.4%
2007
2030
2007
2030
Average annual
growth
20072030
TWh
TWh
8216
15 259
41.6
44.5
2.7
1117
665
5.7
1.9
-2.2
7058
20.9
20.6
2.4
2719
3667
13.8
10.7
1.3
3078
4680
15.6
13.6
1.8
259
839
1.3
2.4
5.2
173
1535
0.9
4.5
9.9
62
173
0.3
0.5
4.6
Wind
4.5%
Coal
Hydro
13.6%
Oil
Gas
Nuclear
4126
Nuclear
10.7%
Hydro
Bioenergy
Wind
Geothermal
Gas
20.6%
Solar
Tide and wave
Total
19 756
Coal
44.5%
Oil
1.9%
402
0.0
1.2
21.2
13
AERA 2.7
0.0
0.0
14.6
100.0
100.0
2.4
34 292
Source: IEA 2009b

a) 2007 (502 960 PJ)
The fuel mix in primary energy demand is expected

to be significantly different than that of today and in
2030 under the IEA reference scenario. The share
of coal is expected to fall sharply to 18 per cent in
2030, as coal demand contracts by 0.9 per cent
per year (figure 2.8). The share of gas is projected
to remain fairly steady at around 20 per cent, with
demand to increase by 0.7 per cent per year to 2030.
This means that measures to encourage low carbon
technologies such as renewables, as well as overall
energy efficiencies, more than offset the effect on
demand of the enhanced competitiveness of gas
relative to coal and oil. The share of renewables is
projected to rise sharply to 22 per cent by 2030.
Renewables
12.6%
The share of coal in
total electricity generation
Nuclear
is also projected to fall sharply in the
Coal450
5.9%
26.5% 2.9).
scenario to 24 per cent in 2030 (figure
As with primary energy, the share of gas in
2030 is projected to be similar to current
levels. Nuclear
power also increases its share
Gas
of electricity20.9%
generation significantly, to 18 per
cent in 2030. All renewables expand their role
in electricity generation under a Oil
450 scenario,
34.1%
reflecting favourable government
policies and an
enhanced competitiveness against fossil fuels
under carbon pricing. The strongest growth is
expected in wind and solar, with geothermal also
rising relatively quickly (IEA 2009b).
b) 2030 (602 481 PJ)
a) 2007 (502 960 PJ)
a) 2007 (19 756 TWh)

Wind
0.9%
Renewables
12.6%
Nuclear
5.9%
Geothermal
Coal
0.3%
18.2%
Bioenergy
Renewables
1.3%
22.0%
Coal
26.5%
Nuclear Hydro
9.9% 15.6%
Gas
20.9%
Nuclear
13.8%
Oil
34.1%
Oil
29.5%
Coal
41.6%
Gas
20.4%
17
AERA 2.8
Gas
20.9%
Figure 2.8 Outlook for world primary energy demand, IEA 450 scenario
Oil
5.7%
Source: IEA 2009b
b) 2030 (602 481 PJ)
a) 2007 (19 756 TWh)

Renewables
Wind
22.0%0.9%
Bioenergy
1.3%
b) 2030 (29 939 TWh)
Coal
18.2%
Geothermal
0.3%
Bioenergy
4.8%
Nuclear
9.9%
Gas
20.4%
Ocean
0.1%
Wind
9.3%
Oil
29.5%
Hydro
15.6%
Solar
2.8%
Geothermal
1.0%
Coal
24.2%
Coal
41.6%
Nuclear
13.8%
AERA 2.8
Oil
1.5%
Hydro
18.9%
Gas
19.0%
Gas
20.9%
Oil
5.7%
Nuclear
18.3%
AERA 2.9
Figure 2.9 Outlook for world electricity generation, IEA 450 scenario
Source: IEA 2009b
b) 2030 (29 939 TWh)

Geothermal
1.0%
Bioenergy
4.8%
Solar
2.8%
Ocean
0.1%
2.3 Australias energy resources

and infrastructure
2.3.1 Australias energy resource base
Australia has abundant, high quality energy

resources, widely distributed across the country.
With the exception of oil, these resources are
expected to last for many more decades, even as
production increases. Australia has a significant
proportion of the worlds uranium and coal
resources and large resources of conventional and
unconventional gas. Australia also has access to a
range of high quality, abundant renewable energy
sources, many of which are yet to be developed.
This section provides an overview of the size and
distribution of Australias energy resources and
related infrastructure. More detailed information
on specific resources is contained in the individual
resource chapters.
Australias non-renewable energy resources include

the fossil fuels coal, gas and oil and the nuclear
energy fuels uranium and potentially thorium.
Table 2.3 provides a summary of current resource
estimates, while figure 2.10 shows their distribution.
Non-renewables
Australias coal resources are world class in

magnitude and quality. Australias economic
demonstrated resources (EDR) of black and brown
coal are estimated to be 1.25 million PJ (76.4 billion
or gigatonnes, Gt) as of December 2008 (chapter
5). Black coal EDR are estimated to be 883 400PJ
(39.2Gt). This is equal to around 90 years remaining
at current rates of production. Resources of black
coal are distributed in most states, with the largest
resources located in the Bowen-Surat and Sydney
Table 2.3 Australian non-renewable energy resources, December 2008

Resource
Black coal
Uraniumb
18
Brown coal
Conventional gas
Coal seam gas
Condensate
Crude oil
LPG
Shale oil
Thoriumb
Unit
Economic
demonstrated
resources
Total demonstrated
resourcesa
PJ
883 400
1 046 500
TWh
245 400
290 695
Mt
39 200
47 500
PJ
651 280
660 240
TWh
180 900
183 401
kt
1163
1179
PJ
362 000
896 300
TWh
100 560
248 974
Mt
37 200
92 300
PJ
122 100
180 400
TWh
33 920
5111
tcf
111
164
PJ
16 590
46 590
TWh
4490
12 970
tcf
15
42
PJ
12 560
16 170
TWh
3490
4492
mmbbl
2136
2750
PJ
6950
8414
TWh
1930
2337
mmbbl
1182
1431
PJ
4614
6210
1725
TWh
1280
mmbbl
1096
1475
PJ
84 600
TWh
23 500
mmbbl
14 387
PJc
kt
76
Resource life at
current production
rates (years)
90
140
490
63
100
31
10
20
a Includes economic and sub-economic demonstrated resources. b Recoverable at <US$ 80/kg. c A conversion into energy content equivalent
for thorium was not available at the time of publication
basins in Queensland and New South Wales,

respectively. Australia has similar sized resources
of brown coal, although these are much lower in
energy content terms. Brown coal EDR are estimated
to be 362000PJ (37.2 Gt), and are located mostly
in Victoria. At current rates of production, there are
nearly 500 years of brown coal resources remaining.
In addition to the large EDR of coal Australia has even
larger coal resources in the sub-economic and inferred
categories. The true size of Australias coal resources
could be even larger as potential coal resources have
not been fully assessed to date because the existing
identified resource base is so large.
December 2008. This is equal to around 60 years

at current rates of production. The EDR estimate
does not include some significant recent discoveries
that are yet to be proven economic and hence total
identified gas resources are significantly larger. These
are expected to grow with further exploration, even
as production increases. CSG EDR are estimated
to be 16 590 PJ (15 tcf), with substantial inferred
resources of 122 020 PJ (111 tcf). CSG exploration
in Australia is relatively immature, and high levels of
current exploration are likely to add significantly to
known resources. There are also tight gas resources
held in low permeability sandstone reservoirs in
several basins although these are not yet well defined.
Australia also has significant resources of gas. These

include the substantial conventional gas resources
located mostly off the northwest coast of Western
Australia and the CSG resources of eastern Australia
(chapter 4). Conventional gas EDR are estimated
to be 122 100 PJ (111 trillion cubic feet, tcf) as of
120
Australias liquid hydrocarbon resources include

crude oil, as well as condensate and LPG resources
associated with gas (chapter 3). Australia also has
significant oil shale resources that could provide
additional liquid fuels if developed. Crude oil EDR
130
140
150
Bonaparte Basin
10
DARWIN
Browse Basin
0
Carnarvon Basin
750 km
19
Bowen Basin
Galilee Basin
Cooper-Eromanga Basin
20
Callide Basin
Tarong Basin
Arckaringa Basin
BRISBANE
Surat Basin
Ipswich Basin
Clarence-Moreton
Basin
30
Gunnedah
Basin
Perth Basin
PERTH
Collie Basin
St Vincent Basin
ADELAIDE
Resource type
Uranium
Black Coal
Brown Coal
Conventional Gas
Coal Seam Gas
Oil (crude, condensate,
LPG)
Basin type
Major energy basin
Murray Basin
SYDNEY
Sydney Basin
Oaklands Basin
Demonstrated resources (PJ)

2000 - 10 000
10 001- 25 000
MELBOURNE
Otway Basin
Gippsland Basin
25 001 - 50 000
50 001 - 100 000
Tasmania Basin
40
HOBART
100 001 - 250 000

250 001 - 500 000
>500 000
AERA 2.10
Figure 2.10 Distribution of Australias major (containing more than 2000 PJ) non-renewable energy resources
Note: Major energy basins outlined in grey. Total resources are in many cases significantly larger than the remaining demonstrated resources
which do not include inferred and potential (yet to be discovered) resources.
are estimated to be 6950 PJ (1182 million barrels,

mmbbl) as of December 2008. This is equal to
around 10 years at current rates of production.
Australias crude oil resources are only small by
world standards and are being depleted at a faster
rate than they are being replenished by discovery.
As a result, Australias domestic production of oil
is declining, and Australia increasingly relies on
imports to meet requirements. However, the oil
potential of Australias frontier basins has not been
adequately assessed to date, and further exploration
may yield additional resources. Australia also has
more substantial liquid hydrocarbon resources
in condensate (EDR of 12560PJ, 2136 mmbbl)
and LPG resources (4614PJ, 1096 mmbbl), but
access to these depends on the development of
the associated gas resources.
More than one third of the worlds known economic
uranium resources are located in Australia (chapter 6).
Australias reasonably assured resources of uranium
recoverable at less than US$80/kg (equivalent to
EDR) are estimated to be 651 280 PJ (1163 kt)
as of December 2008. The estimated accessible
120
uranium resources will last about 140 years at current

production rates. Major uranium deposits are located
in South Australia, the Northern Territory and Western
Australia. Australia also has a major share of the
worlds thorium resources. While not currently in use
as an energy resource, thorium could play a role in the
long term as an alternative to uranium as a nuclear
fuel. Given there is no active exploration for thorium,
resource estimates are uncertain.
Renewables
Australias potential renewable resource base is
also very large and widely distributed across the
country (figure 2.11). However, there are significant
constraints on large-scale utilisation of Australias
renewable resources in the immediate future. At
present, these generally have higher transformation
costs relative to other energy sources (except for
hydro), many are often long distances from markets
and infrastructure, and the technologies to utilise
these resources are commonly immature. To date,
this has limited the uptake of renewable energy in
Australia, although its use is growing rapidly. Wind
is the exception: wind technology is mature and
130
140
150
10
DARWIN
20
750 km
20
BRISBANE
30
PERTH
SYDNEY
ADELAIDE
Accredited renewable energy power stations

(above 3kW capacity)
Lord Howe
Island
MELBOURNE
Biogas
Biomass
Solar
40
HOBART
Hydro
Wind
AERA 2.11
Figure 2.11 Distribution of Australias accredited renewable energy power station sites, above 3 kW capacity
Source: Geoscience Australia for the Office of the Renewable Energy Regulator
wind energy is the fastest growing renewable energy

source in Australia. Expanded government support
for renewable energy sources is expected to underpin
a significant expansion in their use for electricity
generation over the coming decades. Government
support for renewables is discussed further in
section 2.4.1.
Renewable energy resources are usually transient
and not always available, and hence not readily
classifiable and comparable to non-renewable
resources. Renewable resources are often reported
in terms of installed capacity. Installed capacity for
renewables in Australia is provided in table 2.4.
Estimates of potential renewable resources can
also be made based on maps that show the energy
potentially or theoretically available at a site and
detailed studies of the annual and diurnal variation
in the energy to determine the capacity factor. This is
the average actual energy output compared with the
theoretical maximum possible output if the energy
was continuously and fully available for use.
Australia has very large but as yet inadequately
defined and quantified geothermal energy resources
that are the subject of active exploration (chapter
7). In particular, Australia has significant Hot Rock
geothermal resources that could be used to produce
super-heated water or steam suitable for base load
electricity generation by artificially circulating fluid
through the rock. There are also lower temperature
geothermal resources present in deep aquifers in a
number of sedimentary basins that are potentially
suitable for electricity generation or direct use.
Identified geothermal resources as of July 2009
are estimated at around 2.6 millionPJ. The
potential offered by geothermal energy for electricity
generation is only now being examined in Australia.
Electricity generation from geothermal energy in
Australia is currently limited to one pilot power plant
producing 80 kW in south west Queensland. There
Table 2.4 Renewable electricity generation capacity
in Australia, 2009
Resource
Geothermal
Capacity
(MW)
0.1
Hydro
7806
Wind
1703
Solar
105
Ocean
Biogas
226
Bagasse
464
Wood waste
73
Other a
Total
a Other biomass and biodiesel
Source: Geoscience Australia 2009
104
10 484
are also a number of small direct use applications of

geothermal energy resources. Several pilot projects
are expected to be advanced within the next few
years.
Hydro power was developed early in Australia,
particularly in south-eastern Australia (chapter 8).
As of September 2009, Australia has 108 operating
hydroelectric power stations with total installed
capacity of 7806 MW. These coincide with the areas
of highest rainfall and elevation and are mostly in
New South Wales and Tasmania. However, a dry
climate coupled with a low run off over much of
Australia limits substantial expansion of hydro power.
Australia has some of the best wind resources in the
world, primarily located in western, south-western,
southern and south-eastern coastal regions but
extending hundreds of kilometres inland and including
highland areas in south-eastern Australia (chapter 9).
Wind energy technology is relatively mature, and its
uptake is growing quickly in Australia, supported by
government policies. As of September 2009, there
were 85 wind farms in Australia with a combined
installed capacity of 1703 MW.
Solar power is a vast potential source of energy
(chapter 10). The Australian continent has the highest
solar radiation per square metre of any continent
in the world. The annual solar radiation falling on
Australia is approximately 58 million PJ. The best
solar resources are largely located in the northwest
and centre of Australia, commonly in areas that do
not have access to the electricity grid, and are distant
from the major population centres and traditional key
energy markets. However, some of these high quality
resources are close to new and emerging demand
centres such as the Pilbara region. There are also
significant and adequate solar energy resources in
areas with access to the electricity grid and proximal
to the major demand centres. To date relatively high
capital costs have limited widespread use of solar
energy resources. The total installed PV capacity
in Australia is estimated to have been 105MW at
the end of 2008. Significant global investment
in research and development (R&D) is aimed at
increasing the efficiency and cost-effectiveness
of solar power, including the development of solar
thermal power stations.
There are also opportunities for ocean energy in
Australia, which includes mechanical energy from
the tides and waves, and thermal energy from the
suns heat (ocean thermal) (chapter 11). The best
tidal energy resources are located along the northern
margin, especially the northwest coast of Western
Australia, and largely removed from the major
demand centres. Australia also has a world-class
wave energy resource along its western and southern
coastline, especially in Tasmania. Most ocean energy
technologies are relatively new and still need to be
21
proven in pilot and demonstration plants. In Australia,

four electricity generation units based on either tidal
or wave energy have been developed as pilot or
demonstration plants in recent years (totalling around
1 MW of generating capacity).
Bioenergy is another significant potential energy
resource in Australia (chapter 12). Biomass (organic
matter) can be used to generate electricity generation
and heat, as well as for the production of liquid fuels
for transport. Currently Australias use of bioenergy
for electricity generation is limited to bagasse (sugar
cane residue), wood waste, and gas from landfill and
sewage facilities. Biofuels for transport represent
a small proportion of Australias bioenergy: ethanol
is produced from sugar by-products, waste starch
from grain, and biodiesel is produced from used
cooking oils, tallow from abattoirs and oilseeds.
Commercialisation of second generation bioenergy
technologies is likely to increase the range of
resources, such as the non-edible (woody) parts
of plants and potentially algae, available for both
biofuels and electricity generation.
2.3.2 Distribution, ownership and

administration of energy resources
22
Australias energy resources are widely but not evenly

distributed across Australias states and territories.
Certain regions within the States and the Northern
Territory are highly endowed in particular energy
(and other mineral) resources. Many of Australias
known and, potentially, undiscovered oil and gas
100
Under the Australian Constitution mineral and

petroleum resources are owned either by the
Australian or State/Territory governments. Exploration
and development of these resources is undertaken
by companies operating under licences and permits
granted by government. Australian and State/
Territory governments actively encourage investment
in Australias energy resources. Resources onshore
and out to three nautical miles from the baseline of
the territorial sea are the responsibility of the State
and Territory governments. Resources beyond the
three nautical miles which extend to cover the
entire Australian offshore jurisdiction rests with the
Australian Government and is administered through
a Designated Authority/Joint Authority arrangement
with the Australian and State/Northern Territory
governments.
Exploration for and development of non-renewable
resources is administered under the relevant
State/Territory legislation relating to minerals and
petroleum by State/Territory department or agency.
The legislation varies between jurisdictions but is
similar in content and administration, and based
on a two-stage process of exploration permit and
production licence.
120
140
BrB
CB
0
resources lie offshore within Australias large marine

jurisdiction. This has recently been increased to
include large areas of continental shelf beyond 200
nautical miles, including exclusive rights to what
exists on and under the seabed, including oil, gas
and biological resources.
750 km
BoB
160
DARWIN
10
NT
QLD
WA
BRISBANE
SA
NSW
PERTH
ADELAIDE
SYDNEY
VIC
Three Nautical Mile Limit

Outer Limit of the Exclusive Economic Zone of Australia - as
defined by UNCLOS and certain treaties (not all in force)
30
MELBOURNE
GB
TAS
HOBART
Outer Limit of the Continental Shelf of Australia - as defined

by UNCLOS and certain treaties (not all in force)
AERA 2.12
Figure 2.12 Australias jurisdiction boundaries including the extent of Australias marine jurisdiction and major
offshore energy provinces
Note: CB Carnarvon Basin, Br Browse Basin, Bo Bonaparte Basin, GB Gippsland Basin
The jurisdictions all allocate and manage mineral and

petroleum property rights, have primary responsibility
for land administration, regulate operations including
environmental and occupational health and safety,
and collect royalties on the resources produced.
However, the minimum area, initial term of the
permits, and charges and royalties levied vary
between States and Territories. More information is
provided in the Mineral and Petroleum Exploration
and Development in Australia: A Guide for Investors
(www.ret.gov.au/resources/) and from the State/
Territory mineral and petroleum departments/
agencies. The development of non-renewable
resources is similarly governed by relevant State/
Territory planning and development legislation
and administered by designated departments and
agencies charged with those functions.
Australias large marine jurisdiction has recently been
increased by more than 2.5 million km2 of seabed
by the United Nations Commission on the Limits of
the Continental Shelf. The Commission confirmed
the location of Australias continental shelf outer
limit in nine distinct marine regions, which entitles
Australia to large areas of shelf beyond 200 nautical
miles, including exclusive rights to what exists on
and beneath the seabed, including oil, gas and
biological resources.
Responsibility for the petroleum operations in
Australian offshore areas beyond the first three
nautical miles rests with the Australian Government,
and is administered through a Designated Authority/
Joint Authority arrangement with the Australian and
State/Northern Territory governments under the
Offshore Petroleum and Greenhouse Gas Storage
Act 2006. An explanation of Australias maritime
zones is provided in Australias Offshore Jurisdiction
on the RET website. Prospective acreage is released
each year and exploration permits are awarded to
companies through a work program bidding process.
Retention leases and production, infrastructure and
pipeline licences are granted for the recovery and
transport of petroleum products. Further information
is given at www.ret.gov.au/resources/upstream_
petroleum.
2.3.3 Energy infrastructure

Australias existing energy infrastructure is designed
to meet both domestic demand for energy and
international demand for energy commodities
(export markets). Infrastructure is concentrated
in areas where energy consumption is highest
and major energy resources are located. This
tends to be in coastal regions where population is
highest, particularly along the eastern seaboard.
Australias energy production facilities and transport
infrastructure (including mines, power stations, rail,
ports and pipelines) can be affected by climatic
events such as intense precipitation, storms,
bushfires, heat waves and floods. Any future
expansion of Australias energy market, including
access to new energy resources, will require

investment in energy infrastructure, particularly
electricity generation and transmission. Additional
investment will be required not only to replace aging
energy assets but also to allow for the integration of
renewable energy into existing energy supply chains.
Electricity
Australia has five electricity systems and numerous
stand alone, remote electricity systems. The largest
of these systems is the National Energy Market (NEM)
in eastern Australia, followed by the south-west and
north-west interconnected systems (SWIS and NWIS)
in western Australia, and the Darwin-Katherine and
Alice Springs systems in the Northern Territory. The
NEM, established in 1998, allows power to flow
across the Australian Capital Territory, New South
Wales, Queensland, South Australia and Victoria, with
Tasmania joining in 2005. This market is the foundation
of Australias electricity infrastructure, including
transmission lines and generators (figure 2.13).
The NEM is linked by six major transmission
interconnectors. The transmission and distribution
network of the market consists of more than
779900km of overhead transmission and distribution
lines, and more than 108 800 km of underground
cables. There are also a number of projects under
construction to expand the interconnector system.
This interconnected electricity grid is the worlds
longest interconnected power system extending from
Port Douglas (Queensland) to Port Lincoln (South
Australia), a distance of nearly 5000 km (AEMO 2009).
There is also a 290 km 400 kV direct current (DC) sea
bed cable the longest of its type in the world that
connects Loy Yang in Victoria with Bell Bay in Tasmania
(the Basslink Interconnector) and allows trade of
electricity between Tasmania and the mainland.
The various assets that comprise Australias
electricity infrastructure are owned and operated
either by State/Territory governments or the private
sector. Wholesale markets have been established
for the dispatch and trade of electricity in the NEM
and SWIS. Exchange between electricity producers
and electricity consumers is facilitated through a pool
where the output from all generators is aggregated
and scheduled to meet demand through the use
of information technology systems. These systems
balance supply with demand, maintain reserve
requirements, select which components of the power
system operate at any one time, determine the spot
price and facilitate the financial settlement of the
market (AEMO 2009).
The grid connects and is relatively centralised around
power stations at the fuel sources, especially the major
coal resources and gas supply infrastructure, and the
main electricity demand centres. As other resources
are being utilised for power generation, including wind
and coal seam gas, new nodes have been added. The
23
Australian Energy Regulator (AER) reports substantial

new capital investment in the electricity network over
the next five years with almost $33 billion of investment
either approved or proposed (AER 2009).
As part of a plan to improve network efficiency the
Council of Australian Governments (COAG) has
committed to and commenced the roll-out of smart
meters to enable better manage demand on the
network. The Australian Government has committed
$100 million to trial smart grid technologies that
enable better control of (peak) load, and integration
of embedded generation capacity, and provide better
detection and avoidance of faults and disruptions
on the network. Implementation of smart grid
technologies could facilitate greater use of distributed
energy generation with potential for increased energy
fuel efficiency, reduced transmissions losses, and
improved power quality at limited additional costs
(CSIRO 2009).
The development of new sources of electricity,
particularly renewables, will require further expansion
of the grid and increased flexibility, particularly into
120
new areas not previously connected. A report by

the Australian Energy Market Commission (AEMC
2009) acknowledged the impact of government
policies (RET and emissions reduction targets) that
will expand the role of renewable energy sources
and recommended refinements to the existing
energy market framework to better allow for greater
access to renewable resources clustered in remote
geographic areas through development of connection
hubs or scale efficient network extensions. It also
noted that expansion of gas-fired generation to
back up renewable generation, such as wind, would
place a greater demand for gas supply and pipeline
infrastructure and lead to a greater convergence of
the gas and electricity markets.
Ports
Australia has around 70 trading ports, a number of
which are involved in exporting coal, oil, gas and
uranium (Ports Australia 2009). There are nine major
coal exporting terminals at seven ports in New South
Wales and Queensland, 11 major deepwater ports
with facilities to export petroleum liquids and two
ports from which uranium is shipped (figure 2.14).
130
140
150
10
DARWIN
24
750 km
20
BRISBANE
30
PERTH
SYDNEY
ADELAIDE
MELBOURNE
Transmission lines and generators (kV)

88 kV
275 kV
110 kV
330 kV
400 kV
132 kV
180 kV
500 kV
220 kV
Power station
HOBART
40
AERA 2.13
Figure 2.13 Australias electricity infrastructure

Infrastructure capacity constraints (including port

and rail) have limited the Australian coal industrys
ability to respond to growing global demand over
the past few years. However, recent additions to
capacity, together with more expansions planned over
the short to medium term will help alleviate these
constraints. As at October 2009, there were four port
infrastructure projects in Queensland and New South
Wales at an advanced stage of development, which
will add a combined 103 million tonnes to annual
capacity (ABARE 2009c).
Rail
Australia has substantial rail infrastructure. In
New South Wales and Queensland, rail is used to
transport coal from mines to loading ports. As of
October 2009, a number of rail expansion projects
were underway or planned in Queensland and New
South Wales. Rail is also used to transport uranium
to Adelaide and Darwin, the only ports open for
uranium exports.
Gas pipelines
Gas pipelines in Australia are focused around
delivering gas (petroleum gas, natural gas and
120
coal seam gas) from where it is collected (gas and

coal basins) or processed (gas or liquid processing
facilities) to where it is consumed or exported. Major
pipelines connect the conventional gas resources
of the Cooper Basin and offshore Gippsland and
Otway basins to the major population and industrial
centres of the eastern seaboard (Brisbane, Sydney,
Melbourne, and Adelaide) as well as Mount Isa.
The coal seam gas production from the Bowen
and Surat Basin also feeds into this network. The
gas resources off the northwest coast of Western
Australia are distributed to service the mining and
urban centres of Western Australia via the Dampier
to Bunbury and Esperance pipelines. Another pipeline
system connects gas resources in Amadeus and
offshore Bonaparte basins to service the northern
gas market (figure 2.14). There are currently more
than 25000km of gas transmission pipelines in
Australia (APIA 2009). The total length of Australias
gas distribution network is over 82 000 km and
delivers more than 370 PJ of gas a year (AER 2009).
As of October 2009, further transmission capacity is
under construction in Western Australia, Queensland,
New South Wales, South Australia and Victoria
130
140
150
750 km 10
DARWIN
25
Abbot Point
Hay Point and
Dalrymple Bay
20
Gladstone
Brisbane
Kwinana
30
PERTH
Newcastle
SYDNEY
ADELAIDE
Energy resources infrastructure

Gas pipeline
MELBOURNE
Port
Kembla
Transmission line
Railway
Gas processing plant
Coal port
HOBART
40
Uranium port
LNG port
AERA 2.14
Figure 2.14 Australias energy resources infrastructure

(ABARE 2009c). Demand for further gas pipeline

infrastructure is likely to increase as gas-fired
peaking plants play an increasingly significant role in
standby electricity generation in support of expanded
electricity production from renewables such as wind.
2.4 Australias energy market

to 2030
Australias energy market reflects its large and diverse
resource base. Coal plays a dominant role in production,
consumption and trade, while the contribution from
gas and renewables continues to grow.
26
The energy sector is an important part of the

Australian economy. Australias energy production
and exports have grown strongly over the past
30 years, especially in recent years in response
to strong global demand for energy. The energy
industries contributed around $58 billion to industry
gross value added in 200708, or around 5 per
cent of the Australian total. Energy exports were
valued at $45.6 billion in 200708, which is
around 20 per cent of Australias total exports of
goods and services. Energy exports were even
higher in 200809, at around $77.9 billion (ABARE
2009d). Australias relatively low energy prices also
support a large range of manufacturing industries.
The energy sector also provides employment and
significant infrastructure development in remote
and regional areas.
This section examines the key factors that affect
energy markets in Australia, such as economic
and population growth, energy prices, government
policy and technological development, as well as an
overview of current Australian energy production,
consumption and trade. It also contains ABAREs
latest long term projections for the Australian energy
market to 202930.
2.4.1 Energy market drivers

Demand for energy is driven by a range of factors,
including the growth and structure of the economy,
its stage of development, population and government
policies. The choice of energy is based on prices,
resource endowment, location and availability,
available technologies, as well as government
policies. Some of these key drivers are discussed
in more detail below.
Economic growth and structure

Energy is an essential input into economic activity,
and growth in the economy is one of the main drivers
of increases in energy demand. Australias real GDP
has increased by 3.2 per cent per year since 1999
2000. In 200809, Australias real GDP increased
by 1.0 per cent, following growth of 3.7 per cent in
200708. This is largely as a result of the adverse
effect of the global financial crisis on domestic
demand and exports. As financial markets stabilise
and consumer and business confidence worldwide is

restored, economic growth in Australia is expected to
return to its longer term potential by 201011 and
beyond. Between 200708 and 202930, Australian
GDP growth is assumed to average 2.9 per cent per
year (ABARE 2010a).
The Australian economy is also expected to continue
to shift in terms of structure away from agriculture
and industry toward the services sector. The services
sector tends to use less energy per unit of output
than manufacturing. This will continue to dampen the
expected growth in energy demand over the next two
decades.
Population growth
Population growth affects the size and pattern of
energy demand. All else being equal, an increase
in population requires an increase in energy use to
support it. The Australian population is assumed
to increase from 21.6 million in 2008 to reach
28.5million by 2030 (ABS 2008, 2009).
Government policy
Government policies can affect both the pace of
energy demand growth, and the type of energy used.
Policies designed to enhance energy efficiency, for
instance, would slow the pace of energy demand
growth. Policies designed to enhance energy security
may encourage diversity in the types of fuels used
in an economy, or where the energy is sourced
from. Policies to address environmental issues such
as climate change may target a greater uptake of
renewable energy technologies.
In Australia, two key government policies over the
period to 2030 that will reshape the energy market
are the Renewable Energy Target (RET) and a
proposed carbon emissions reduction target.
In mid-2009, legislation for the expanded national
RET was passed. The RET scheme is designed to
ensure that 20 per cent of Australias electricity
supply comes from renewable sources by 2020.
This will be achieved through an expansion of the
previous Mandatory Renewable Energy Target (MRET)
scheme, increasing the legislated national target
from 9500GWh to 45850 GWh in 2020, in addition
to what would have been generated without the
policy. After 2020, the target will be maintained at
45 000 GWh until 2030, by which time it is expected
that there will be a carbon price high enough to
support renewable energy generation. The new
targets took effect on 1 January 2010.
The aim of the RET scheme is to accelerate the
uptake of renewable energy for on-grid power
generation and to contribute to the development
of internationally competitive renewable energy
industries. It is also designed to bring existing
state-based renewable energy targets into a single,
national scheme.
Box 2.1 The proposed carbon emissions reduction target

The Australian Government released the White Paper
on the Carbon Pollution Reduction Scheme (CPRS) on
15 December 2008 (Australian Government 2008).
This document sets out the Governments policy for
two components of its carbon mitigation strategy
the establishment of a medium term target range
for emissions reduction and the final design of the
emissions reduction target. The White Paper allowed
for two different scenarios:
a 5 per cent emissions reduction target: which
requires a 5 per cent reduction in emissions
below 2000 levels by 2020; and
a 15 per cent emissions reduction target: which
requires a 15 per cent reduction in emissions
below 2000 levels by 2020.
Both scenarios are based on the assumption that
international emissions trading gradually expands;
developed economies participate from 2010;
developing countries join over time; and there is
The proposed Carbon Pollution Reduction Scheme

(CPRS) aims to reduce emissions of greenhouse
gases by placing a limit on aggregate annual
emissions from all the covered types and sources of
emissions and allowing carbon pollution permits to
be traded, with the price of permits to be determined
by the market. Box 2.1 contains a brief overview of
the scheme. The CPRS is proposed to be phased in
from 1 July 2011 but is yet to be legislated.
Other actions include the Clean Energy Initiative (CEI)
announced by the Australian Government in May 2009.
This is designed to support the research, development
and demonstration (RD&D) of low-emission energy
technologies, including industrial scale Carbon Capture
and Storage (CCS) and solar energy (RET 2009).
Complementing this, the National Low Emissions Coal
Initiative established the Carbon Storage Taskforce to
develop a National Carbon Mapping and Infrastructure
Plan to identify suitable geological storage potential
to underpin deployment of CCS in Australia. The
Taskforce report is available on www.ret.gov.au.
Under the CCS Flagships Program, support will be
given for the construction and demonstration of
large scale integrated carbon capture and storage
projects in Australia with a target to create 1000
MW of low emission fossil fuel electricity generation
capacity. Also part of the CEI is the Solar Flagships
Program which received funding to support the
construction and demonstration of large scale solar
power stations in Australia with a target of 1000
MW of electricity generation capacity. Under both
programs, the commissioning of projects is expected
to commence from 2015.
global participation by 2025. Under a 5 per cent

emissions reduction target, a slower start to
global greenhouse gas emissions reductions and
stabilisation of emissions in the atmosphere at 550
parts per million (ppm) CO2-equivalent or lower are
assumed. The 15 per cent emissions reduction target
assumes a faster start and stabilisation at 510 ppm.
New measures for the emissions reduction target,
including an expanded target, were announced on
4 May 2009 (Australian Government 2009a). In
particular, Australia committed to a larger reduction
in emissions of 25 per cent below 2000 levels
by 2020 subject to an ambitious international
agreement involving all major emitters and consistent
with stabilisation of emissions at 450 ppm or lower
by mid century.
Under all these scenarios, Australias long-term
target is to reduce emissions by 60 per cent below
2000 levels by 2050.
ABAREs latest projections for Australian energy

consumption, production and trade to 202930
incorporate the RET and a 5 per cent emissions
reduction target (below 2000 levels by 2020), as well
as other Australian and State/Territory government
initiatives (ABARE 2010a). The design of the
emissions reduction target modelled in this report
is consistent with the proposed CPRS as specified
in the White Paper on the CPRS released on 15
December 2008, and amended on 4 May 2009.
A summary of these results is presented in section
2.4.3. Further details of the results and assumptions
are available in that publication (ABARE 2010a).
The Department of Climate Change regularly
publishes annual projections of Australias
greenhouse gas emissions relative to the Kyoto
target and on an indicative basis out to 2020
(DCC 2009). This includes projected emissions
from the stationary energy sector.
Energy prices
Energy prices affect the demand for, and supply of,
energy. Australias energy prices are affected by
domestic and world supply and demand for energy
commodities, as well as factors that influence supply
and demand directly and indirectly. For example,
climatic events may increase the demand for heating
and result in increased world oil prices. Geopolitical
factors that could be expected to reduce world
supply of oil, such as tensions in the Middle East,
generally result in increases in the world oil price.
Conversely, events such as the global financial crisis,
which reduce the demand for oil as economic activity
declines, result in oil prices falling (figure 2.15).
27
Australia has some of the lowest prices in the OECD

for electricity, coal and gas. The abundance of
Australias coal and gas reserves and the proximity
of those reserves to areas of high energy demand
along the east and west coasts of Australia results
in low electricity and gas prices for consumers.
Australia is reliant on world oil prices because our
domestic reserves and production are relatively small
compared with demand.
Real energy prices generally rose for most of
the 2000s to mid-2008 following a period of low
prices which discouraged investment in new energy
supplies (figure 2.16). The rise in prices reflected

strong growth in demand for energy, particularly in
China, with suppliers struggling to bring additional
production on-line to meet requirements. Energy
prices fell sharply in mid-2008 as a result of the
global economic downturn (figure 2.15).
After significant declines in energy commodity prices
in 200809 as a result of the global economic
downturn, world prices for these commodities have
started to recover in line with the improved outlook for
a recovery in world economic growth. Over the medium
term, it is expected that a strengthening in global
120
Global
financial
crisis
Real (2009)
100
Nominal
US$/bbl
80
Hurricane
Katrina
60
Iranian
revolution
40
Hurricane
Ivan
Iraq begins
exporting oil
under UN
Resolution 986
Iraq
invades
Kuwait
Oil
embargo
Outlook for
world economy
improves
20
Invasion
of Iraq
28
Year
December 2009
March 2006
March 2004
March 2002
March 2000
March 1998
March 1996
March 1994
March 1992
March 1990
March 1988
March 1986
March 1984
March 1982
March 1980
March 1978
March 1976
March 1974
March 1972
March 1970
March 2008
AERA 2.15
Figure 2.15 Crude oil (world trade weighted) prices, 1970 to 2009
Source: ABARE 2009e
1200
Coal (Australia-Japan thermal coal)
1000
Uranium (Ux Consulting)
World energy price index
Oil (WTI)
LNG (Japanese import price)
800
600
400
200
AERA 2.16
0
1990
1992
1994
1996
1998
2000
Year
Figure 2.16 World energy price index

Source: ABARE 2009e
2002
2004
2006
2008
demand, underpinned by the assumed economic

recovery, will once again place upward pressure on
energy prices, with significant volatility expected to
remain. A more detailed assessment of the medium
term outlook for energy commodities is provided in
Australian Commodities (ABARE 2010b).
In the longer term, energy price trends will hinge on
a number of factors including not only global demand
but also constraints on supply, notably the level of
investment in additional production capacity, costs of
production, and technology.
Over the past few years, international thermal coal
prices have generally followed a similar trajectory
to oil and gas prices, as a reflection of inter-fuel
substitution possibilities. In the medium term,
thermal coal contract prices are assumed to remain
above 200708 levels, supported by strong demand
growth expected in countries such as China and
India, combined with continuing infrastructure
congestion in key exporting countries, including
Australia. Beyond the medium term, global thermal
coal prices are expected to increase slowly in real
terms reflecting the higher costs associated with
developing new mines, including those further inland,
being largely offset by the adoption of more advanced
technology (figure 2.17).
In the medium term, oil prices are assumed to recover
following their substantial decline in the second half
of 2008 as a result of the economic recovery and
higher oil demand. However, the long term prospects
for oil prices are much less certain. Key factors that
are expected to drive long term oil prices are the
cost of developing remaining oil reserves, the level
and timing of investment in production and refining
capacity, and technological development in relation
to alternative liquid fuels. The estimated capital and
production costs for conventional oil sources have
increased in recent years due to rising materials,
equipment and labour costs. As a result, new oil
projects are estimated to be uneconomic at a world
240
World energy price index
200
160
120
80
40
AERA 2.17
2007- 2009- 2011- 2013- 2015- 2017- 2019- 2021- 2023- 2025- 2027- 202908 10 12 14 16 18 20 22 24 26 28 30
Year
Coal
LNG
Figure 2.17 Outlook for world energy prices

Source: ABARE 2010a
Oil
price of below US$70 a barrel (ABARE 2010a). While

a rise in the marginal cost of production is expected
over time, technological developments associated with
non-conventional liquids, such as coal-to-liquids, gasto-liquids, shale oil and second-generation biofuels,
have the potential to play a major role in anchoring
oil prices at a level that is below what would be
the case without these backstop technologies. The
assumed development and entry of these technologies
underpins the long term price assumptions used in
this report. However, there are clearly uncertainties
surrounding this price profile, particularly in terms
of the costs of alternative technologies and how
these may evolve over time as a consequence of
technological developments. Further, the costs of
some of these technologies could also be affected
by carbon pricing.
Over the long term, LNG prices are assumed to
follow a similar trajectory to oil prices, reflecting
an assumed continuation of the established
relationship between oil prices and long-term LNG
supply contracts through indexation, and substitution
possibilities in electricity generation and end use
sectors. In its 2009 World Energy Outlook, the
IEA flags a potential relaxation of this relationship
as significant new gas supplies including
unconventional gas and LNG come on line, though
indexation will still remain dominant in the Asia
Pacific region, where most of Australias gas trade
will continue to occur (IEA 2009b).
Emissions intensity reshaping Australias

electricity generation
Government policies encouraging clean energy will
tend to favour those technologies with lower or zero
emission intensities that is, they emit lower or no
emissions during electricity generation, excluding
those during construction and/or installation.
Emissions of carbon dioxide and other greenhouse
gases are significantly higher from coal-fired power
stations using currently deployed technology than other
forms of energy, especially renewable energy (figure
2.18). Gas-fired plants tend to have lower emissions
than coal, whereas emissions from renewables
(excluding bioenergy) are generally near zero.
The introduction of a price on carbon emissions will
raise the price of all fossil fuels to users such as
power generators and industry, thereby lowering the
relative price of energy from low-carbon fuels and
technologies. The impact will be greatest on coal
and least on gas, reflecting their different carbon
intensities. Carbon pricing favours gas over coal,
and renewables over gas. This means that in the
longer term, a carbon price favours investment in gasfired capacity over coal-fired capacity, and investment
in renewables over gas (IEA 2009b). However, CCS
has the potential to dramatically lower greenhouse
emissions from coal and gas fired plants. Figure 2.18
shows the substantial reduction in carbon dioxide
29
emissions expected in single cycle pulverised coal

(black and brown) coal plants and combined cycle
gas turbines which employ CCS technologies
compared to the same technology without CCS.
Figures 2.18 and 2.19 also show how the relative
technology costs change between 2015 and
2030 as learning and experience in technologies

improves. There is now substantial investment by
both government and industry to accelerate the
development and deployment of new technologies,
including solar and CCS technologies. CCS is
discussed in more detail in Chapter 5.
1000
1000
900
Levelised cost of technology
800
800
CO2 emissions
700
700
600
600
500
500
400
400
300
300
200
200
CO 2 emissions (kg/MWh-net)
Levelised cost of technology (2009 A$/MWh)
900
100
100
AERA 2.18
0
Parabolic Trough w/ Storage
Fixed PV
Single Axis PV
Parabolic Trough w/out Storage
Source: EPRI technology status data, 2010
Central Receiver w/out Storage
Central Receiver w/ Storage
Two Axis PV
OCGT
IGCC Black CCS
SCPC Brown CCS
Nuclear
SCPC Black CCS
Hot Rocks Geothermal
PC-Oxy Black
CCGT CCS
Wind
IGCC Black
Hot Sedimentary Aquifer
CCGT
Figure 2.18 Technology ranking, 2015
600
600
Levelised cost of technology
500
CO2 emissions
400
400
300
300
200
200
100
100
CO 2 emissions (kg/MWh-net)
500
AERA 2.19
0
Parabolic Trough w/out Storage
Parabolic Trough w/ Storage
Fixed PV
Single Axis PV
OCGT
Central Receiver w/out Storage
Two Axis PV
Hot Rocks Geothermal
Central Receiver w/ Storage
Figure 2.19 Technology ranking, 2030
SCPC Brown CCS
Nuclear
IGCC Black CCS
SCPC Black CCS
PC-Oxy Black
CCGT CCS
Wind
0
30
SCPC Brown
SCPC Black

Note for 2.18 and 2.19: EPRI levelised cost of technology estimates based on simplified pro-forma costs, individual projects may lie outside
this. Levelised cost of technologies: includes weighted cost of capital (8.4% real before tax); excludes financial support mechanisms; excludes
grid connection, transmission, and firming (standing reserve requirements); and includes a notional allowance of 7.5% for site-specific costs.
Cost competitiveness of energy technologies

The cost imposed by a price on carbon emissions
and the demand for energy sources with lower
greenhouse gas emissions generally is driving
the development of new low emissions energy
technologies. Many of these are at different stages
of development, demonstration and deployment
(see below) and hence have different cost
structures. The Electric Power Research Institute
(EPRI) has recently assessed the status of different
electricity technologies in 2015 and 2030.
This EPRI technology status data enables the
comparison of technologies at different levels
of maturity. It should not be used to forecast
market and investment outcomes. The levelised
cost of technologies represents the revenue per
unit of electricity generated that must be met
to breakeven over the lifetime of a plant. These
costs are in 2009 Australian dollars and relate to
technologies in 2015 and 2030. The combined
impact of uncertainty ranges in plant capital cost,
fuel cost, project and site specific costs, and CO2
transportation and storage costs are shown in
figures 2.18 and 2.19.
The technologies covered include:
Coal (black and brown coal) including Single
Cycle Pulverised Coal (SCPC), Pulverised Coal
with Oxy-combustion (PC-Oxy), and Integrated
Gasification Combined Cycle (IGCC), all with and
without Carbon Capture and Storage (CCS);
Gas Open Cycle Gas Turbine (OCGT) and
Combined Cycle Gas Turbine (CCGT) both with
and without Carbon Capture and Storage (CCS);
Wind;
Geothermal Enhanced Geothermal Systems
(EGS) or Hot Rock, and Hot Sedimentary Aquifer
(HSA);
Nuclear;
Solar Thermal including Central Receiver and
Parabolic Trough, all with and without storage;
and
Solar Photovoltaic (PV) including Two Axis,
Single Axis and Fixed.
While these technology cost estimates were
developed on the basis of generic plant configurations
rather than on detailed plant designs or equipment
and material costs, and are subject to uncertainty in
relation to a number of factors, they provide valuable
and comprehensive information on the relative
costs of different electricity generation technologies
in an Australian setting, and how these costs might
change over time. Importantly though, these costs
do not include the cost of any carbon price.
The relative costs of different technologies is more

important than the absolute magnitude of these
costs in determining their relative prospects in the
electricity generation sector (merit order). The EPRI
results show that in the medium term, coal and gas
will remain amongst the lower technology cost options,
although these costs are expected to increase when
carbon capture and storage technology is adopted.
Of the renewable energy technologies, wind is one of
the lowest cost options. Despite a significant decline
in the costs of solar technologies expected in the
future, the costs of these technologies are expected to
remain relatively high over the coming years. The costs
of geothermal are shown to be competitive with other
baseload technologies.
Development of new low emissions energy

technologies
The stage of development that a technology is
at will also affect its uptake over the next two
decades. Most new technologies, including energy
technologies, initially have higher costs than
incumbent technologies. But over time, the costs
of the new technology may be lowered through
technology learning as its production costs
decrease and its technical performance increases
(IEA 2008; figure 2.20).
As an example, wind as a proven and widely used
technology generally costs less per unit of electricity
generation than many other renewable technologies.
Those still at development and demonstration stage
include a number of solar, ocean and geothermal
technologies. Figure 2.21, developed by EPRI,
shows the stage of development of key renewable
technologies and the relationship of the stage of
development to the costs of that technology.
As these technologies advance and technical issues
are resolved, it is expected that costs will come
down, encouraging more widespread uptake. The
rate of switching from older technologies to these
new technologies will depend on both relative costs
Research and
Development
R&D seeks to overcome technical barriers and

to reduce costs. Commercial outcomes are
highly uncertain, especially in the early stages.
Demonstration
The technology is demonstrated in practice.

Costs are high. External (including government)
funding may be needed to finance part or all
of the costs of the demonstration.
Deployment
Successful technical operation, but possibly in

need of support to overcome costs or non-cost
barriers. With increasing deployment, technology
learning will progressively decrease costs.
Commercialisation
(Diffusion)
The technology is cost competitive in some or

all markets, either on its own terms or, where
necessary, supported by government
intervention (e.g. to value externalities such
as the costs of pollution).
Figure 2.20 Stages in technology development
AERA 2.20
Source: IEA 2008
31
Solar dish-stirling STE
Solar central receiver STE
Anticipated cost of full-scale application
Biomass gasification
Solar PV
concentrating
Geothermal
Wave
Offshore wind
Solar PV
thin-film
Tidal and
river turbines
Solar parabolic trough STE
Solar PV silicon
Cofired biomass
Direct-fired biomass
Onshore wind
Hydro
Solar PV
nano-structured
Research
Development
Demonstration
Deployment
Time
Figure 2.21 Grubb curve for a range of renewable energy technologies
Mature technology
AERA 2.21
and on the extent to which consumers value the long

term, often at that stage uncertain, benefit of the
new technology (IEA 2008).
32
Governments can also influence the rate at which a

technology advances, through assistance in research
and development, and in demonstration projects
for new technologies. For example, the Australian
Government announced the $4.5 billion Clean Energy
Initiative in May 2009, which will support RD&D
of low emissions energy technologies, including
industrial-scale CCS and solar energy.
Each individual resource chapter includes
information on emerging technologies, including their
development status, potential benefits, as well as
potential barriers to deployment.
Table 2.5 Energy investment requirements,
Australia, 20062030
2006 US$b
Extraction
222 283
Transformation
72 95
Transportation
111 155
Distribution
Total
Crude oil and petroleum products
9 12
414 546
33 51
Natural gas
180 235
Coal
105 130
Electricity and heat
96 131
Generation
49 63
Transmission
39 58
Distribution
Total
8 10
414 546
Source: APERC 2009
Future energy investment

Any future expansion of Australias energy market,
including access to new energy resources, will
require investment in energy infrastructure. Energy
infrastructure is currently concentrated in areas
where energy consumption is highest and major
energy resources are located, particularly along
the eastern seaboard of Australia. A significant
expansion in Australias energy infrastructure
particularly electricity generation and transmission
will be required in the next two decades if Australia
is to meet its growing and changing demand for
energy. Utilising new energy resources, particularly
renewables, will require a more flexible and
decentralised electricity grid.
The Asia Pacific Energy Research Centre (APERC)
released projections of energy investment
requirements, from extraction to distribution, to
2030 in November 2009 (APERC 2009). Australias
energy investment requirements estimated by APERC
are summarised in table 2.5. APERC estimates that
between US$414 and 546 billion (in 2006 dollars)
will be required over the period 2006 to 2030 for
the energy sector as a whole. More than half of
this is expected to be in resource extraction,
and around a quarter in transportation, including
rail, pipelines, and electricity transmission lines.
Within the electricity sector, more than half of the
requirement investment is in generation, and a
further 41 per cent in transmission. The requirement
could be even greater if Australia commits to
accelerated climate change action, particularly
increasing the share of renewable energy in electricity
generation.
2.4.2 Overview of Australian energy

production, consumption and trade
Table 2.6 Australian energy production, 200708

Production
Share
Average
annual
growth
199900 to
200708
PJ
17 070
98.3
2.7
Production
Australia is the worlds ninth largest energy producer,
accounting for around 2.4 per cent of the worlds
energy production (IEA 2009a). Australia produces
energy for meeting our domestic energy consumption
needs and for export to other countries. More than
three-quarters of Australias energy production is
currently exported (ABARE 2009a).
Australias energy production has been increasing
at a faster rate than domestic consumption in recent
years, driven by growing global demand for energy.
Over the period 19992000 to 200708, energy
production increased at an average annual rate of
2.7 per cent, to reach 17 360 PJ in 200708.
Most of this expansion was driven by coal, uranium
and, to a lesser extent, gas (figure 2.22).
The main fuels produced in Australia, on an energy
content basis, are coal, uranium and gas. In 2007
08, Australias energy production was dominated
by coal, which accounted for 54 per cent of total
energy production in energy content terms, followed
by uranium (27 per cent) and gas (11 per cent)
(table 2.6). Crude oil, condensate and LPG
represented 6 per cent of total production, and
renewables represented 2 per cent.
Australian production of renewable energy is
dominated by bagasse, wood and wood waste, and
hydro electricity, which combined accounted for 86
per cent of renewable energy production in 200708.
Wind, solar and biofuels accounted for the remainder
of Australias renewable energy production.
Nonrenewables
Black coal
8722
50.2
4.0
Brown coal
709
4.1
0.7
Crude oil, LPG,

condensate
1059
6.1
-4.3
Gas
1833
10.6
4.2
Uranium
4747
27.3
2.5
Renewables
290
1.7
1.1
Hydro
43
0.3
-4.2
14
0.1
69.5
226
1.3
0.3
Wind
Bioenergy
Solar
0.0
13.0
Geothermal
0.0
17 360
100.0
2.7
Total
Source: ABARE 2009a

Australia is the worlds twentieth largest primary
energy consumer, and ranks fifteenth on a per person
basis (IEA 2009a). In 200708, energy consumption
was 5772 PJ, representing 33 per cent of total
Australian energy production (ABARE 2009a).
Although Australias energy consumption is growing,
the rate of growth has been decreasing over the past
50 years. Following annual growth of around 5 per
20 000
18 000
16 000
14 000
PJ
12 000
10 000
Renewables
Crude oil and NGL
Uranium
Brown coal
Gas
Black coal
LPG
8000
6000
4000
2000
AERA 2.22
0
1973-74 1975-76 1977-78 1979-80 1981-82 1983-84 1985-86 19887-88 1989-90 1991-92 1993-94 1995-96 1997-98 1999-00 2001-02 2003-04 2005-06 2007-08
Figure 2.22 Australian energy production
Year
Note: NGL = Natural Gas Liquid hydrocarbons (including condensate)

Source: ABARE 2009a
33
cent during the 1960s, growth in energy consumption

fell during the 1970s to an average of around 4 per
cent per year, largely as a result of the two major oil
price shocks. During the 1980s, economic recession
and sharply rising energy prices resulted in annual
growth falling to an average of 2.3 per cent. Despite
robust economic growth, annual average growth in
energy consumption fell to 1.9 per cent over the
period from 199900 to 200708.
This trend indicates a longer term decline in energy
intensity of the Australian economy which can
Table 2.7 Australian primary energy consumption,
200708
Consumption
Average
annual
growth
199900 to
200708
PJ
Nonrenewables
5482
95.0
1.9
Coal
2292
39.7
1.4
Oil
1941
33.6
1.3
Gas
1249
21.6
3.9
Renewables
Australian primary energy consumption consists

mainly of oil and coal. Black and brown coal
accounted for the greater share of the fuel mix, at
around 40 per cent, followed by oil (34 per cent),
gas (22 per cent) and renewable energy sources
(5 per cent) (table 2.7; figure 2.23).
Total electricity production in Australia was around
925 PJ (257 TWh) in 200708. More than threequarters of Australias electricity generation is coalfired, with a much smaller but increasing contribution
from gas (16 per cent) and renewables (7 per cent),
predominantly hydro with lesser contributions from
bioenergy, wind and solar photovoltaic cells (PV)
figure 2.24). Australias abundant coal reserves,
located mostly on the eastern seaboard close to the
largest electricity market, have historically provided
a relatively low-cost source of fuel.
290
5.0
1.1
Hydro
43
0.8
-4.2
Trade
Wind
14
0.2
69.5
Bioenergy
Australia is a net energy exporter. Around 78 per

cent of Australias total domestic energy production
is exported. However, Australia is a net importer of
crude oil and refined petroleum products. Imports
account for around 33 per cent of Australias total
primary energy consumption (ABARE 2009a).
226
3.9
0.3
Solar
0.1
13.0
Geothermal
0.0
5772
100.0
1.9
Total
Source: ABARE 2009a
Energy exports accounted for 20 per cent of

Australias total earnings from exports of goods
and services in 200708. Energy export earnings
6000
5000
Solar
0.0%
Hydro
4.5%
4000
PJ
34
Share
be attributed to two main factors. First, greater

efficiency has been achieved through technological
improvement and fuel switching. Second, rapid
growth has occurred in less energy intensive sectors
such as the commercial and services sector relative
to the more moderate growth of the energy intensive
manufacturing sector.
Wind
1.5%
Bioenergy
0.9%
3000
2000
1000
0
197374
Gas
15.9%
AERA 2.23
197879
198384
198889
199394
199899
200304
200708
Oil
0.9%
Year
Renewables
Brown coal
Gas
Black coal
Coal
76.3%
Oil
AERA 2.24
Figure 2.23 Australian primary energy consumption,

by fuel
Figure 2.24 Electricity generation by fuel, 200708
Source: ABARE 2009a
Source: ABARE
80
70
2008-09 $billion
60
50
Uranium
Petroleum products
LPG
Crude oil and other

refinery feedstocks
LNG
Coal
40
30
20
10
0
1980-81
AERA 2.25
1984-85
1988-89
1992-93
1996-97
2000-01
2004-05
2008-09
Year
Figure 2.25 Australian energy exports

Source: ABARE 2009d
Table 2.8 Australian energy trade, 200708

Export
Coal
Import
Volume PJ
Value $m
Volume PJ
Value $m
7183
24 403
Oil and oil products
808
14 446
1678
29 879
LNG
802
5854
202a
724
Uranium
4765
887
13 559
45 591
1880
30 603
Total
a Natural gas produced in the Joint Petroleum Development Area is counted as imports. It is exported from Darwin as LNG
Source: ABARE 2009a, d
increased by 16 per cent in 200708 to $45.6

billion, and then to $77.9 billion in 200809.
$9.3billion in 200809 (200809 dollars), despite a

$10 billion surplus for LNG (ABARE 2009d).
The value of Australias energy exports has grown

at an annual rate of around 10 per cent over the
past 20 years. Much of this growth has been driven
by coal exports both thermal and metallurgical.
LNG and oil exports have also increased in value,
supported by increases in international oil prices and
higher export volumes (figure 2.25).
2.4.3 Outlook for Australias energy

market
Coal is Australias largest energy export earner, with

a value of $24 billion in 200708, followed by crude
oil and LNG (table 2.8). More than three-quarters
of Australias black coal production is destined for
export. In volume terms, coal was also the largest
energy export, accounting for more than half of
Australias energy exports in 200708 (on an energy
content basis). Uranium exports accounted for more
than one third of total exports.
Despite the strong growth in energy exports Australia
has limited oil reserves and imports most of its oil
needs. Australias petroleum trade has declined from
a surplus of $3.6 billion in 200001 to a deficit of
ABAREs latest projections for Australian energy

consumption, production and trade to 202930
incorporate the RET (20 per cent of electricity supply
from renewable sources by 2020), a 5 per cent
emissions reduction target (below 2000 levels by
2020), and other government initiatives (ABARE
2010a). The design of the emissions reduction
target modelled in this report is consistent with the
proposed CPRS as specified in the CPRS White Paper
released on 15 December 2008, and amended on
4 May 2009 (box 2.1). Further details of the results
and assumptions are available in that publication
(ABARE 2010a).
ABAREs long term energy projections exclude
uranium, because it is not used to produce energy
domestically and there are currently no plans to do
so. For this energy resource assessment, ABARE
has separately modelled the outlook for Australian
35
35 000
30 000
25 000
20 000
Energy production
15 000
Total production of energy in Australia is projected to

grow at an average rate of 3.2 per cent per year. At
this rate, Australian production of energy is projected
to reach 35 057 PJ in 202930 (table 2.9).
10 000
Gas production is projected to rise to 8505 PJ in

202930, or 24 per cent of total energy production,
supported by increased demand both domestically
and for export (figure 2.26). The share of uranium
and renewables in total energy production is also
expected to increase. In contrast, the share of coal
in total energy production is projected to fall to 40
per cent by 202930, although coal production is still
projected to increase by 1.8 cent per year over the
outlook period to reach 13 875 PJ in 202930. This
growth in production reflects expected strong coal
export demand, countering the projected contraction in
demand for coal in the domestic market.
36
40 000
PJ
uranium production and trade and included it in the

results for total energy production and trade. As
a result, the projected growth rates and totals for
energy production and trade differ to those reported
in ABARE (2010a). These and other differences are
discussed further in Box 2.2.
Over the period to 202930, Australian energy

consumption is projected to increase by 1.4 per
cent per year to 7715 PJ in 202930. This rate of
growth is slower than in previous decades, reflecting
the introduction of significant policy measures the
Table 2.9 Outlook for energy production by fuel,
202930
202930
202930
Average
annual
growth
200708 to
202930
PJ
Nonrenewables
34 467
98.3
3.2
Coal
13 875
39.6
1.8
668
1.9
-2.0
Oil and LPG

Gas
8505
24.3
6.7
11 420
32.6
4.1
590
1.7
3.5
Hydro
46
0.1
0.2
Wind
160
0.5
11.6
Bioenergy
340
1.0
2.2
Solar
24
0.1
5.9
Geothermal
20
0.1
18.4
35 057
100.0
3.2
Uranium
Renewables
Total
Note: Total energy production differs from that reported in

ABARE 2010a because of the inclusion of uranium. See box 2.2
for further explanation
Source: ABARE; ABARE 2010a
5000
AERA 2.26
2007- 2009- 2011- 2013- 2016- 2017- 2019- 2021- 2023- 2025- 2027- 202908 10 12 14 17 18 20 22 24 26 28 30
Year
Renewables
Oil and LPG
Uranium
Brown coal
Gas
Black coal
Figure 2.26 Fuel mix in Australian energy production,

200708 to 202930
Source: ABARE; ABARE 2010a
RET and the emissions reduction target both of

which are expected to lead to an increase in energy
prices, and an associated dampening effect on
energy demand. It also reflects the slow down in
economic growth in the short term, and ongoing
efficiency improvements in the Australian economy.
Australias aggregate energy intensity (measured as
total domestic energy consumption per dollar of GDP)
is projected to continue to decline, by around 1.4 per
cent per year over the next two decades.
The share of coal in total primary energy consumption
is projected to fall to 23 per cent by 202930
(figure 2.27; table 2.10). In contrast, the share of
gas (conventional and coal seam gas) increases
to account for 33 per cent of primary energy
consumption in 202930.
Gas is expected to be the fastest growing fossil
fuel over the projection period. Gas consumption is
projected to rise by 3.4 per cent per year over the
outlook period, with total primary demand for gas
projected to more than double to reach 2575 PJ by
202930. This growth in demand is driven primarily
by the electricity generation sector and the mining
sector, and reflects the shift to less carbon intensive
fuels in a carbon constrained environment. As such,
much of this growth is at the expense of coal.
In 200708, around 5 per cent of energy consumption
in Australia was sourced from renewable energy. With
the implementation of the RET, the share of renewable
energy is projected to increase substantially to account
for 8 per cent of primary energy consumption in 2029
30. This implies an average annual growth rate of 3.5
per cent, with the strongest growth expected to occur in
geothermal energy (from a very small base), followed
40
Table 2.10 Outlook for primary energy consumption,

by fuel, 202930
2007-08
30
202930
202930
Average
annual
growth
200708 to
202930
PJ
Nonrenewables
7125
92.4
1.2
Coal
1763
22.8
-0.8
Oil
2787
36.1
1.3
Gas
2575
33.4
3.4
3.5
2029-30
20
10
Figure 2.27 Fuel mix in Australian primary energy

consumption, 200708 and 202930
Geothermal
Solar
Bioenergy
Wind
Hydro
Gas
Oil
Coal
AERA 2.27
Source: ABARE 2010a
by wind and solar. Most of the expansion in renewable

energy is projected to take place in the period to
201920 reflecting the implementation of the RET.
Gross electricity generation in Australia is projected
to grow over the outlook period by an average of 1.8
per cent per year to 366 TWh (1318 PJ) in 202930.
Under a policy setting that includes the RET, a
5 per cent emissions reduction target and other
government initiatives, the relative shares of non-
Renewables
590
7.6
Hydro
46
0.6
0.2
Wind
160
2.1
11.6
Bioenergy
340
4.4
2.2
Solar
24
0.3
5.9
Geothermal
20
0.3
18.4
7715
100.0
1.4
Total
Source: ABARE 2010a
renewables and renewables in electricity generation

are expected to change significantly over the
projection period to 202930. As a result of the
incentives provided under the RET, the share of
renewables is projected to increase to around 20 per
cent by 201920 and remain at that level until the
end of the projection period. This reflects the design
Box 2.2 Statistical reporting issues

ABARE (2010a) Australian energy projections to
202930, does not include projections for uranium
production and trade. This is because uranium
is not used to produce energy domestically. For
the purposes of this Australian energy resource
assessment, ABARE has separately undertaken
projections for uranium production and trade to
202930. This is to enable a more complete
discussion of future demands on Australian energy
resources in this assessment. However, as a
result, the projections reported here for total energy
production and trade and their respective annual
growth rates, and thus the shares of individual fuels,
differ from ABARE (2010a).
in ABARE (2010a). However, the projected growth

rates over the period 200708 to 202930 reported
in this assessment are consistent with those in
ABARE (2010a).
The base year (200708) data in ABARE (2010a)

are drawn from ABAREs Australian Energy Statistics
(ABARE 2009a). The 200708 data reported in
ABARE (2010a) are the results of model calibration
and may not be identical to actual 200708 data.
These slight differences have no material impact
on the energy projections presented in this report.
This Australian energy resource assessment reports
actual 200708 data, as it appears in the Australian
Energy Statistics (ABARE 2009a). As a result, the
200708 data reported in this assessment differs
slightly for some fuels to the 200708 data reported
There is a range of estimates available for the shares

of fuel used in electricity generation in Australia. For
200708, this assessment uses unpublished ABARE
estimates based on the Australian Energy Statistics
(ABARE 2009a). This may differ from other published
estimates for a number of reasons, including
whether it is based on fuel inputs into electricity
generation or electricity output, the conversion factor
for fuel inputs to electricity outputs, and the type
of generator included (for example, whether off-grid,
non-scheduled, cogeneration or small generators
are included).
The figures for gas production in 200708 also differ

slightly between the Australian Energy Statistics
(ABARE 2009a) and ABARE (2010a) to reflect the
inclusion in the latter of gas imports of 202 PJ from
the Joint Petroleum Development Area (JPDA) in gas
production. This is to enable comparison with the gas
production projections, which combines the two. Gas
resources and production reported by Geoscience
Australia also include JPDA in the total.
37
Coal
157
42.8
-0.6
Gas
135
36.8
5.0
Oil
1.5
0.0
Renewables
69
18.9
6.2
Hydro
13
3.5
0.2
Wind
44
12.1
11.6
Bioenergy
0.7
2.3
Solar
1.0
17.4
Geothermal
1.5
18.4
366
100.0
1.8
Total
Source: ABARE 2010a
Geothermal
Solar
Bioenergy
Wind
Hydro
Oil
Gas
Coal
Less advanced
8000
6000
4000
2000
0
AERA 2.29
Figure 2.29 Major electricity generation projects at

various stages of development
Source: ABARE 2009f
Geothermal
1.2
Solar
81.1
Advanced
10 000
Biomass
297
12 000
Wave
Nonrenewables
Source: ABARE 2010a
Brown coal
AERA 2.28
Figure 2.28 Fuel mix in Australian electricity generation,

200708 and 202930
To be
determined
Oil
TWh
20
Hydro
Average
annual
growth
200708 to
202930
40
Black coal
202930
2029-30
Wind
202930
2007-08
60
Coal seam gas
Table 2.11 Electricity generation, by fuel, 202930
80
Conventional gas
38
The longer term role of coal is heavily dependent

on technological developments related to carbon
capture and storage. The timing for the deployment
of carbon capture and storage (CCS) technologies
hinges on the economic viability of this technology
given emission prices. In the modelling undertaken
in ABARE (2010a), the deployment of carbon capture
and storage technologies for new plants is not
triggered to any significant extent because of their
relatively high costs. Nonetheless, the modelling
results suggest that, largely due to the development
of subsidised projects, some coal-fired electricity
generation with CCS may emerge by 2030. In
addition, the significant global support to overcome
technical and financing hurdles faced by CCS
technologies (Global CCS Institute 2009) have the
potential to bring forward the large-scale, commercial
deployment of CCS technologies for electricity
generation and other energy-intensive industries
through accelerated cost reductions associated with
learning by doing.
Within the category of non-renewable energy, the

key change projected over the outlook period is a
substitution away from coal-fired generation to gasfired generation. While coal is expected to continue to
dominate the electricity fuel mix under the assumed
policy setting, emission pricing leads to a switch
away from higher-emission energy sources for
electricity generation. Coal-fired electricity (both black
and brown coal) generation is projected to decrease
at an average rate of 0.6 per cent per year over the
projection period, leading to a fall in its share to
43 per cent in 202930 (table 2.11; figure 2.28).
A large part of the decline in coal-fired electricity is

taken up by gas-fired generation technologies. The
share of gas in electricity generation is projected
to rise to 37 per cent in 202930. The projected
increase in gas-fired electricity generation is
supported by its major share of currently committed
electricity generation capacity (figure 2.29). As of
October 2009, conventional gas and coal seam gas
accounted for 60 per cent of the total capacity of
advanced electricity generation projects in Australia,
with more than 2100 MW of new gas-fired plants
committed or under construction (ABARE 2009f).
Gas-fired generation is a mature technology with
competitive cost structures relative to new and
renewable technologies. As such, it has the potential
to play a major role in the transition period until loweremission technologies become more cost effective.
The flexibility of gas-fired turbines (notably open cycle
gas turbines) will underpin a greater role as peaking
plants providing stand-by electricity generation capacity
MW
of the RET, which requires a ramp up of renewable

energy in the period to 2020.
In parallel with the increasing share of gas in the

electricity fuel mix, these projections highlight
the significant expansion in the use of non-hydro
renewable energy resources between 200708 and
202930. Wind energy is projected to account for
the majority of the increase in electricity generation
from renewable sources over the projection period
to account for 12 per cent of electricity generation in
202930. Within the renewable technology cluster,
wind energy is a proven technology with relatively
lower costs. The growth in wind energy is being
supported by growth in the use of gas-fired plants as
a source of flexible, peaking electricity generation.
This is likely to lead to greater convergence of the
gas and electricity markets (AEMC 2009).
Given Australias large potential bioenergy resources,
the potential commercialisation of second generation
technologies, and the RET, bioenergy has the
potential to make a growing contribution to renewable
electricity generation in Australia. However, this growth
prospect is likely to be constrained to some extent by
competition for bioenergy resources, water availability,
and logistical issues associated with handling,
transport and storage. Bioenergy for electricity
generation is projected to grow by 2.3 per cent per
year over the period to 202930 accounting for nearly
1 per cent of electricity generated in that year.
Solar energy is projected to grow at an average
annual rate of 17 per cent, albeit from a very low
base. Electricity generation from solar energy in
Australia is currently almost entirely sourced from PV
installations. Electricity generation from solar thermal
systems is currently limited to small pilot projects,
although interest in solar thermal systems for large
scale electricity generation is increasing. The high
investment costs of solar technologies represent the
most important barrier to their deployment. However,
there is considerable scope for the cost of these
technologies to decline significantly over time. The
uptake of solar energy, and renewable energy sources
generally, will also depend on government policies
aimed at reducing greenhouse gas emissions. In
the first instance, uptake will be driven by projects
subsidised under various policies and programs, and
will be from a low base. In this context, the RET, the
Clean Energy Initiative and the proposed emissions
reduction target are all expected to underpin the
growth of solar energy in Australia over the outlook
period. Government support for technology research,
development and demonstration is likely to play a
significant role in accelerating the development and
commercialisation of large-scale solar power stations.
Australia is considered to have considerable Hot
Rock and potentially Hot Sedimentary Aquifer
geothermal energy potential. Exploration for
geothermal resources is taking place in all states

and the Northern Territory. Electricity generation from
geothermal energy in Australia is currently limited to
a single small operation but several projects are at
proof-of-concept or early commercial demonstration
stage. A significant impediment to geothermal
electricity generation in Australia is the distance of
many of the resources from existing transmission
lines or consumption centres. Given the major
investment in geothermal energy RD&D by both
government and industry in Australia, it is considered
likely that commercial scale geothermal power will
become commercially viable over the outlook period.
Geothermal energy is projected to account for 1.5 per
cent of electricity generation by 202930.
Hydroelectricity generation is projected to remain
broadly unchanged over the outlook period, reflecting
the limited availability of suitable locations for
the expansion of large grid based hydroelectricity
generation and water supply constraints. Most of the
projected expansion in capacity is assumed to be
associated with the upgrading of existing equipment
and the development of small-scale schemes.
While Australia has abundant and widespread
renewable energy resources, the projected major
shift to renewables will be contingent on the rate
of technological advances and demonstration of
commercial viability, with attendant reduction in the
cost of the technologies. This applies particularly
to solar and geothermal in the first instance (being
further along the Grubb curve as shown in figure
2.21) as well as wave and tidal energy. Government
support is expected to be important in development
and demonstration of these new technologies. The
uptake of renewable energy will also be influenced
by timely and adequate investment in infrastructure
development.
25 000
20 000
15 000
PJ
as backing for a greater contribution from intermittent

renewable energy production, especially wind energy.
10 000
5000
0
2007-08
2011-12
2015-16
2019-20
2023-24
2027-28
Year
Net exports
Consumption
Production
AERA 2.30
Figure 2.30 Australias energy supply-demand balance,

excluding uranium, 200708 to 202930
Source: ABARE 2010a
39
Table 2.12 Net trade in energy, 202930

202930
Black coal
Oil
PJ
12 112
2.4
-2211
3.3
92
3.8
5930
9.5
11 420
4.1
LPG
LNG
Uranium
average annual
growth 200708
to 202930
a Includes crude oil, other refinery feedstock and petroleum products

Source: ABARE, ABARE 2010a
Energy trade
As the projected growth in energy production exceeds
that of primary energy consumption, Australias
exportable surplus of energy is projected to increase
as a proportion of consumption over the projection
period (figure 2.30).
40
Black coal, which includes both thermal and

metallurgical coal, is projected to remain Australias
dominant energy export. The projected annual growth
rate of 2.4 percent, to reach 12 112 PJ by 202930
(table 2.12), is built on expectations that global
demand for coal will continue to increase in the
period to 2030 as a result of increased demand for
electricity and steel making raw materials, particularly
in emerging market economies in Asia. Australia,
with its abundant reserves of high-quality coal, has
the potential to contribute significantly to meeting this
increased demand, subject to adequate investment in
mine and related infrastructure development.
Growth in LNG exports will be supported by the
development of a number of expansion and greenfield
projects, both in north west Australia and based on
CSG on the east coast, to meeting growing world
demand for LNG, particularly in Asia. LNG exports
are projected to reach 5930 PJ in 202930.
With declining oil production, Australias net trade
position for liquid fuels is expected to weaken
over the outlook period, with net imports increasing
by 3.3 per cent per year over the projection period.
Uranium exports are also projected to increase
strongly over the period to 202930 to meet growing
Asian investment in nuclear capacity, by more than
4 per cent per year to reach 11 420 PJ.
2.5 References
ABARE (Australian Bureau of Agricultural and Resource
Economics), 2009a, Australian Energy Statistics, Canberra,
August
ABARE, 2009f, Electricity generation: Major development

projects October 2009 listing, Canberra, November
ABARE, 2010a, Australian energy projections to 202930,
ABARE research report 10.02, prepared for the Department
of Resources, Energy and Tourism, Canberra (forthcoming)
ABARE, 2010b, Australian Commodities, vol. 17, no. 1,
March quarter, Canberra
ABS (Australian Bureau of Statistics), 2008, Population
Projections, Australia, 20062101, catalogue 3222.0,
September
ABS, 2009, Australian Demographic Statistics, March 2009,
catalogue 3101.0, September
AEMC (Australian Energy Market Commission), 2009,
Review of Energy Market frameworks in light of Climate
Change Policies. Final Report. September, Sydney
AEMO (Australian Energy Market Operator), 2009, Corporate
Profile <www.aemo.com.au/corporate/0000-0002.pdf>
AER (Australian Energy Regulator), 2009, State of the
Energy Market 2009. The Australian Competition and
Consumer Commission, Melbourne
APERC (Asia Pacific Energy Research Centre), 2009, APEC
Energy Demand and Supply Outlook, 4th edition, Institute of
Energy Economics Japan, Tokyo, November
APIA (Australian Pipeline Industry Association), 2009, Facts
and figures, <http://www.apia.net.au/industry/facts-andfigures/>
Australian Government, 2008a, Carbon Pollution Reduction
Scheme: Australias Low Pollution Future, Canberra, December
Australian Government, 2009, New Measures for the Carbon
Pollution Reduction Scheme, <http://www.climatechange.
gov.au/minister/wong/2009/media-releases/May/
mr20090504.aspx>
BP, 2009, BP Statistical Review of World Energy, London,
June
CSIRO, 2009, Intelligent Grid. A value proposition for
distributed energy in Australia, CSIRO Report ET/IR 1152,
DCC (Department of Climate Change), 2009, Tracking to
Kyoto and 2020, Australias Greenhouse Emissions Trends
1990 to 200812 and 2020, Canberra, August, <http://
www.climatechange.gov.au/en/publications/projections/
tracking-to-kyoto.aspx>
EPRI (Electric Power Research Institute), 2010, EPRI
technology status data, <http://www.epri.com>
Geoscience Australia, 2009a, Australias identified mineral
resources, Canberra
Geoscience Australia, 2009b, Oil and gas resources of
Australia 2008, Canberra
Geoscience Australia, 2009c, Map of operating renewable
energy generators in Australia, Canberra, <http://www.
ga.gov.au/renewable/>
Global CCS Institute 2009, Strategic Analysis of the
Global Status of Carbon Capture and Storage, <http://
www.globalccsinstitute.com/downloads/Status-of-CCSWorleyParsons-Report-Synthesis.pdf>
IEA (International Energy Agency), 2009a, World Energy
Balances, 2009 edition, OECD, Paris
IEA 2009b, World Energy Outlook, OECD, Paris, November
ABARE, 2009b, Energy in Australia 2009, Canberra, April
IEA, 2008, Energy Technology Perspectives 2008

Scenarios and Strategies to 2050, OECD, Paris
ABARE, 2009c, Minerals and energy: Major development

Ports Australia, 2009, Australias Ports Industry,

<http://www.portsaustralia.com.au/port_industry/>
ABARE, 2009d, Australian Commodities, vol. 16, no. 4,

December quarter, Canberra
RET (Department of Resources, Energy and Tourism),

2009, Clean Energy Initiative, <http://www.ret.gov.au/
Department/Documents/CEI%20Fact%20Sheet%20(13%20
May%2009).pdf>
ABARE, 2009e, Australian Commodity Statistics 2009,

Canberra, December
Chapter 3
Oil
3.1 Summary
Key messages

Oil is the most widely used primary source of energy globally. It plays a critical role as a transport
fuel in most countries including Australia.
Australia has about 0.3% of world oil reserves. Australia has limited reserves of crude oil and
most of Australias known remaining oil resources are condensate and liquefied petroleum gas
(LPG) associated with giant offshore gas fields.
There is scope for growth in Australias oil reserves in existing fields, and for new oil discoveries in
both proven basins and in under-explored frontier basins which are prospective for petroleum.
There is also potential to develop alternative transport fuels such as biofuels, coal-to-liquids (CTL),
gas-to-liquids (GTL) and shale oil.
Australias oil consumption is projected to increase over the two next decades but the rate of
growth is projected to be slower than in the past 20 years. Domestic crude oil production is
projected to continue to decline.
In the absence of major new discoveries and the development of alternatives, Australias net imports
of liquid fuels are projected to increase, rising to be three-quarters of consumption by 202930.
41
3.1.1 World oil resources and market

Oil is an important energy source, accounting
for around 34 per cent of world primary energy
consumption in 2007. However, its importance
has been declining steadily since the 1970s when
its share of primary energy consumption was
around 45 per cent.
World proven oil reserves were estimated at some
1.4 trillion barrels (equivalent to 8.3 million PJ) at the
end of 2008. This is equal to around 42 years supply
at current production rates. This global reserves
to production ratio has been maintained at around
40 years for the past decade. Australia accounted
for around 0.3 per cent of these reserves.
OECD Asia, which includes China and India. At

present more than half of world oil consumption
is used in the transport sector.
World oil demand is projected by the International
Energy Agency in its reference case to increase
by around 1 per cent per year to reach 36.8 Bbbl
(210 271 PJ) in 2030. Demand growth is expected
to be concentrated in non-OECD economies.
World oil supply is also projected to increase at
an average annual rate of 1 per cent. OPECs oil
production is projected to grow as is supply from
unconventional sources such as oil sands, gas-toliquids, coal-to-liquids and oil shale.
World oil production was around 30.5 billion

barrels (174 012 PJ) in 2008. Major oil producers
include Saudi Arabia, the Russian Federation,
United States, Iran and China, with the Middle
East accounting for 31 per cent of the worlds
production in 2008.
3.1.2 Australias oil resources
The cost of oil production is expected to increase

with the development of deeper water fields and
the use of enhanced recovery technologies.
Australian has only limited domestic supplies of

crude oil, and relies increasingly on imports to
meet demand.
World oil consumption has increased at an annual

average rate of 1.6 per cent since 2000, to reach
31.6 billion barrels (Bbbl, 171 236 PJ) in 2008.
Crude oil exploration in Australia has not repeated

the early success of the 1960s when the first
offshore exploration yielded giant field discoveries
in the Gippsland Basin. Although Australia has over
The fastest growing oil consuming region is non-
In 2008, Australias identified oil resources were

estimated at 30 794 PJ made up of 16 170 PJ
(2750 million barrels or mmbbl) of condensate,
8414 PJ (1431 mmbbl) of crude oil and 6210 PJ
(1475 mmbbl) of LPG (liquefied petroleum gas).
120
BONAPARTE BASIN
130
Total produced: 3364

Crude oil remaining: 1205
Condensate remaining: 2799
LPG remaining: 1193
140
150
10
DARWIN
BROWSE BASIN
Total produced: 0
LPG remaining: 1391
750 km
CANNING BASIN
Total produced: 18
20
AMADEUS BASIN
CARNARVON BASIN
Total produced: 112

LPG remaining: 0.8
Total produced: 13 357

LPG remaining: 2603
COOPER/EROMANGA BASINS
LPG remaining: 125
PERTH BASIN
Total produced: 143

Condensate remaining: 0.2
BRISBANE
BOWEN/SURAT BASINS
Total produced: 289

LPG remaining: 10
PERTH
SYDNEY
ADELAIDE
Liquid hydrocarbon (Crude Oil, Condensate

& LPG) resources in PJ
MELBOURNE
Past production
Petroleum basin
Crude oil resources
Gas pipeline
Condensate resources
30
OTWAY BASIN
Total produced: 11
Gas pipeline
(proposed)
Oil pipeline
LPG resources
BASS BASIN
Total produced: 16
LPG remaining: 241
HOBART
GIPPSLAND BASIN
40

LPG remaining: 646
42
AERA 3.1
Figure 3.1 Australian crude oil, condensate and naturally-occurring LPG resources, infrastructure, past production
and remaining resources
300 crude oil fields, most production has come

from only seven major fields.
Estimates of undiscovered crude oil in proven
basins range from 9996 PJ (1700 mmbbl) to
29 588 PJ (5032 mmbbl) and undiscovered
condensate from 4116 PJ (700 mmbbl) to
35480PJ (6035 mmbbl). Petroleum potential
exists in deep water frontier basins but the oil
resource remains unknown.
Australias largest remaining discovered liquid
petroleum resource is now the condensate and
LPG in the undeveloped Ichthys gas field in the
offshore Browse Basin (figure 3.1).
The scope for enhanced oil recovery (EOR)
from identified fields was estimated at about
6468 PJ (1100 mmbbls) in 2005. Additions to
resources from field growth were estimated at
about 5880PJ (1000 mmbbls) in 2004. In the
intervening period some of this potential has
been realised.
In addition, Australia has a large unconventional
and currently non-producing identified shale oil
resource of 131 600 PJ (22 390 mmbbl) which

could potentially contribute to future oil supply
if economic and environmental challenges can
be overcome.
3.1.3 Australias oil market

Oil and oil products have the second largest
share (1942 PJ or 34 per cent) of primary energy
consumption in Australia, but domestic primary oil
(crude oil, condensate and LPG) production accounts
for only 6 per cent of total energy production.
Australias net imports of oil and oil products
represented 45 per cent of consumption in 200708.
Australian primary oil production (crude oil,
condensate and LPG) peaked in 200001 at
1546 PJ (276 mmbbl). Since then primary oil
production has been declining at an average rate
of 5 per cent per year to 1059 PJ (187 mmbbl,
29.8 GL) in 200708.
Australia is a net importer of oil and oil products.
In 200708, Australias net imports of primary oil
were around 383 PJ (48 mmbbl, 7.7GL), valued
at $5.5 billion.
C H A PTE R 3: OIL
40
2400
32
1800
24
1200
16
600
with oil in this study. Oil that has been refined into
other products is referred to as refined products,
oil products or petroleum products.
%
PJ
3000
0
1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 200700
01 02 03 04 05 06 07 08
202930
Year
Oil consumption (PJ)
Share of total
energy (%)
AERA 3.2
Figure 3.2 Australias outlook for oil consumption

Source: ABARE 2009b; ABARE 2010
Australian refineries produced 1557 PJ

(269mmbbl, 42.8 GL) of refined oil products in
200708.
In the past, Australia was a net exporter of
refined oil products. Since the closure of the
Port Stanvac refinery in 2003, Australia has
also become a net importer of these products.
In 200708, Australias net import of refined oil
was around 430 PJ (94 mmbbl, 15 GL), valued at
$12billion.
The transport sector is the largest consumer
of oil, accounting for around 70 per cent of
Australias total use of oil products.
In ABAREs latest long term energy projections,
which include the Renewable Energy Target,
a 5 per cent emissions reduction target and
other government policies, consumption of oil
and oil products in Australia is projected to
increase by 1.3 per cent per year to reach
2787PJ (equivalent to about 473mmbbl)
in 202930. Its share of primary energy
consumption is projected to remain around
36 per cent in 202930 (figure 3.2).
Australian production of crude oil, condensate
and LPG is projected to decline at an average rate
of 2 per cent per year to 668 PJ by 202930.
Net imports of oil and oil products are projected
to account for 76 per cent of consumption in
202930.
3.2 Background information

and world market
3.2.1 Definitions
The term oil encompasses the range of liquid
hydrocarbons and includes crude oil and condensate.
Liquefied petroleum gas (LPG) is considered along
Crude oil is a naturally-occurring liquid consisting

mainly of hydrocarbons derived from the thermal
and chemical alteration of organic matter buried
in sedimentary basins. It is formed as organic-rich
rocks are buried and heated over geological time.
Crude oil varies widely in appearance, chemical
composition and viscosity. Most Australian crude oils
are classified as light oil. Light crude oils are liquids
with low density and low viscosity that flow freely at
standard conditions: they have high API gravity due
to the presence of light hydrocarbons. Heavy oils, on
the other hand, have higher density and viscosity, do
not flow readily and have low API gravity (less than
20) having lost the lighter hydrocarbons. Crude oil is
found in deposits with or without associated gas; this
gas may include natural gas liquids condensate and
liquefied petroleum gas (LPG). Crude oil can also be
found in semi-solid form mixed with sand and water
(oil or tar sands) or as an oil precursor, also in solid
form, called oil shale. Oil from oil sands and oil shale
is known as unconventional oil (box 3.1).
Condensate is a liquid mixture of pentane and heavier
hydrocarbons found in oil fields with associated gas
or in gas fields. It is a gas in the subsurface reservoir,
but condenses to form a liquid when produced and
brought to the surface (figure 3.3).
Liquefied petroleum gas (LPG) is a mixture of lighter
hydrocarbons, such as propane and butane, and is
normally a gas at the surface. It is usually stored and
transported as a liquid under pressure. In addition
to naturally-occurring LPG, it is also produced as a
by-product of crude oil refining. LPG has lower energy
Methane
CH 4
LNG and
Sales Gas
Ethane
C2H 6
Gas at
surface
Propane
C 3H 8
LPG
Butane
C 4H10
Gas in
subsurface
Higher
hydrocarbons
C 5+
Condensate
and oil
Liquid at
surface
Liquid in
subsurface
C 35
AERA 3.3
Figure 3.3 Petroleum resources nomenclature in terms

of chemical composition, commercial product, physical
state in the subsurface and physical state at the surface
43
3.2.2 Oil supply chain
content per volume than condensate and crude oil

(Appendix E).
Figure 3.4 provides a representation of the oil

industry in Australia. The oil industry undertakes
the exploration, development and production of
crude oil, condensate and LPG. More generally,
the petroleum industry also includes downstream
activities such as petroleum refining, and the
transport and marketing of refined products, as
well as non-energy products such as petrochemicals
and plastics.
Refined products include petroleum products used

as fuels (LPG, aviation gasoline, automotive gasoline,
power kerosene, aviation turbine fuel, lighting
kerosene, heating oil, automotive diesel oil, industrial
diesel fuel, fuel oil, refinery fuel and naphtha) and
refined products used in non-fuel applications
(solvents, lubricants, bitumen, waxes, petroleum coke
for anode production and specialised feedstocks).
Primary oil consumption includes all petroleum used
directly as fuel crude oil, condensate, LPG and
petroleum products.
Resources and exploration

The supply of oil begins with undiscovered
resources that must be identified through
exploration. Geoscientists identify areas where
hydrocarbons are liable to be trapped in the
subsurface, that is in sedimentary basins of
sufficient thickness to contain mature petroleum
source rocks as well as suitable reservoir and seal
rocks in trap configurations (box 3.1). The search
narrows from broad regional geological studies
through to determining an individual drilling target.
Primary oil production includes crude oil, condensate

and naturally occurring LPG prior to use in refineries.
Oil shale is a fine-grained sedimentary rock
containing large amounts of organic matter
(kerogen), which can yield substantial quantities of
hydrocarbons. Oil shale is essentially a very rich
thermally immature source rock: it requires heating
to high temperatures to convert the organic material
within the shale to liquid hydrocarbons shale oil.
Shale oil is considered an alternative transport fuel,
readily substitutable for high grade crude oil.
44
In the Australian context, governments have taken a

key role in providing regional pre-competitive data to
encourage investment in exploration by the private
sector (figure 3.5). Company access to prospective
exploration areas is by competitive bidding, usually
on the basis of proposed work program (that is
intended exploration effort) or by taking equity in
(farming-into) existing acreage holdings.
Oil sands, or tar sands, are sandstones impregnated

with bitumen, the very viscous heavy hydrocarbons
remaining after the more volatile components of
crude oil have been lost. Mining and processing is
required to recover the oil.
Development and
Production
Resources and Exploration
Exploration
decision
Development
decision
Processing, Transport,
Storage
Export
market
World
Market
Oil tanker
Oil tanker
Project
Undiscovered
resources
End Use Market
Transport
Oil
refinery
Identified
resources
Domestic
market
Industrial
Electricity
generation
Commercial
Residential
Condensate LPG
from gas fields
Imports
Refined
petroleum
imports
Other
AERA 3.4
Figure 3.4 Australias oil supply chain

Source: ABARE and Geoscience Australia
C H A PTE R 3: OIL
Field/prospect
Informed
actions
Prospect/
field/segment
inventory
Seismic
imaging
Exploration
permit
Uncertainty
Seismic
attributes
Geology
modelling
km2
Industry
100
Risk
Play focus
Government
Basin statistics
-field size distance
-analogs
10 000
Play risk
-CHS maps
- success rates
Lead inventory
Regional understanding
Precompetitive
study
play fairway analysis, stratigraphic drilling

Structural
styles
Data
management
Stratigraphy
-well data
-fieldwork
Petroleum
systems
Sequence
stratigraphy
Plate
reconstructions
Basic maps
-structure
-isopachs
Regional seismic
gravity & magnetic
100 000
10 000 000
Documentation
AERA 3.5
Figure 3.5 The resource discovery triangle

Source: Geoscience Australia (adapted from BP)
Reflection seismic is the primary technology used to

identify likely hydrocarbon-bearing structures in the
sub-surface. Drilling is then required to test whether
the structure contains oil or gas, or both, or neither.
The initial discovery well may be followed by appraisal
drilling and/or the collection of further survey data
(often 3D seismic) to help determine the extent of
the accumulation.
Development and production

Once an economically recoverable resource has been
identified, it is a matter of deciding whether to proceed
to development based on project economics, market
conditions (oil prices and cost of extraction technologies
and facilities) and the availability of finance.
The development phase involves the construction
of the infrastructure required for the production of
the oil resource. Depending on the location, this
infrastructure includes development wells, production
facilities, a gathering system to connect individual
wells to processing facilities, temporary storage and
transport facilities.
In Australia, the options for offshore development
include a floating production and storage offloading
facility (FPSO) as, for example, the Enfield oil
development in the Carnarvon Basin, or building a
production platform and piping the oil ashore, as at
the Cliff Head field in the Perth Basin. Where the

pipeline infrastructure is well established, new crude
oil discoveries can be rapidly brought on stream as
in the inshore Carnarvon Basin. Onshore, the options
are to link into or extend the oil pipeline network or,
in cases of small remote fields, as at Blina in the
Canning Basin, to transport the oil by road.
The production phase includes extracting oil from
the reservoir and separating impurities. At the initial
stage of extraction, the natural pressure of the
subsurface reservoir is generally sufficient for the
oil to flow to the surface. If the reservoir pressure is
insufficient, an advanced recovery method is used to
increase reservoir pressure.
Condensate is a component of natural gas and is
produced during gas or crude oil field development.
In some cases the condensate is extracted and the
gas is reinjected in a process called gas recycling.
Processing, transport, storage and trade

Crude oil and condensate is not generally used in its
raw or unprocessed form, apart from some lightsweet crude oil with low sulphur content which can
be used as a burner fuel for steam generation in
industrial applications. The majority of crude oil is
processed in a refinery to produce refined products,
such as gasoline, diesel, aviation fuel, fuel oil,
Box 3.1 Petroleum Systems and Resource Pyramids

Oil accumulations are the products of a petroleum
system (Magoon and Dow 1994). The critical
elements of a petroleum system are:
source an organic rich rock, such as an organic
rich mudstone;
reservoir porous and permeable rock, such as

sandstone;
seal an impermeable rock such as a shale or
mudstone;
trap a sub-surface structure that contains the
45
accumulation, such as a fault block or anticline;

overburden sediments overlying the source rock
required for its thermal maturation; and
migration pathways to link the mature source to
the trap (figure 3.6).
In addition to these static elements, the actual
processes involved trap formation, hydrocarbon
generation, expulsion, migration, accumulation and
preservation must occur, and in the correct order,
for the petroleum system to successfully operate and
for oil accumulations to be formed and preserved.
It is essential that the source rock has been through
(or is still within) the oil window, the zone in the
subsurface where temperatures are sufficient for
thermal alteration of the organic matter to oil. At
higher temperatures, below the bottom of the oil
window, oil starts to be broken down (cracked) to gas.
Unconventional oil accumulations reflect the
failure or under-performance of the petroleum
system. Oil shale is an example where a thermally
immature source rock has not generated and
expelled hydrocarbons. Oil or tar sands occur where
conventional crude oil has failed to be trapped at
depth and has migrated near to the surface and has
become degraded by evaporation, biodegradation and
water washing to produce a viscous heavy oil residue.
46
The petroleum resource pyramid (McCabe 1998)

describes how a smaller volume of easily extracted
conventional gas and oil is underpinned by larger
volumes of more difficult and more costly to extract
unconventional gas and oil (figure 3.7). For the

unconventional hydrocarbon resources, additional
technology, energy and capital has to be applied to
extract the gas or oil, replacing the natural action
of the geological processes of the petroleum
system. Technological developments and rises in
price can make the lower parts of the resource
pyramid accessible and economic to produce. The
recent development of oil sands in Canada and of
shale gas in the United States are examples where
rising energy prices and technological development
has facilitated the exploitation of unconventional
hydrocarbon resources lower in the pyramid.
Increased breakeven
price required
Increased technology
requirements
Smaller volumes,
easy to develop
Conv.
Oil
Larger volumes,
difficult to
develop
Conv.
Gas
Heavy Oil
CSG
Oil Sands
Tight Gas and

Shale Gas
Shale Oil
Gas Hydrates
AERA 3.7
Figure 3.7 Petroleum Resource Pyramid

Source: Geoscience Australia (adapted from McCabe 1998 and
Branan 2008)
Geographic extent of petroleum system

Present day
Trap
Trap
Trap
Stratigraphic extent
of petroleum system
Basement
AERA 3.6
Overburden
Source
Seal
Underlying sequence
Reservoir
Petroleum accumulation
Figure 3.6 Petroleum system elements

Source: Magoon and Dow 1994 (modified)
Top of oil window

Bottom of oil window
C H A PTE R 3: OIL
kerosene and LPG. Some crude oil and condensate

can also be converted into non-energy products and
used as a feedstock in the petrochemical industry.
refineries to meet incremental domestic refined

product demand. Some 8 per cent of Australias
refinery production was exported, mainly in the form
of transport fuels for international carriers.
Once refined, end-use products can be stored and

transported to the demand centre via road, rail, sea
or pipeline.
End use market

The major end-use market for refined products is the
transport sector. Refined petroleum products are
transported to local distribution points, from where
they are delivered either directly to end users or to
retail outlets, predominately as petrol, diesel and LPG.
Around 70 per cent of Australias crude oil and

condensate production occurs off the north-west
coast. Around 60 per cent of this production is
exported, reflecting the proximity to refineries in
south-east Asia. In 200809, approximately 63 per
cent of Australias refinery input requirements were
imported. This partly reflects the insufficient crude
oil and condensate production in eastern Australia,
particularly within reasonable distance of refineries in
Sydney and Brisbane.
3.2.3 World oil market

Table 3.1 provides a snapshot of the Australian oil
market within a global context. Australias reserves
account for only a small share of global reserves, and
Australia is a relatively small producer and consumer.
Oil reserves and production
In 200809, around 40 per cent of Australias

refined petroleum products were imported, primarily
reflecting increasing dependence on overseas
Table 3.1 Key oil statistics, 2008
Reserves
World proven oil reserves were estimated to be

around 1.4 trillion barrels (equivalent to around
8.3 million PJ), at the end of 2008 (table 3.1). This

unit
Australia
200708
Australia
2008
World
2008
PJ
24 284
8 257 028
1408
Bbbl
4.2
Share of world
0.3
100
Production of crude oil, condensate and LPG
PJ
1059
174 012
mmbbl
187
194
30 471
0.6
100
Share of world
Average annual growth from 2000
-4.3
kb/d
734
88 627
Oil refining capacity
1.3
Share of world
0.8
100
Consumption of crude oil, condensate and LPG
PJ
1417
-2.4
Consumption of oil and oil products
PJ
1942
171 236a
mmbbl
342
31 586a
Share of world
1.1
100
Share of primary energy consumption
33.6
34.0
1.3
1.6
Imports of crude oil and other refinery feedstocks
PJ
1019
98 392a
-0.3
1.8
Imports of oil and oil products
PJ
1678
139 109a
kb/d
762
771
67 277a
mmbbl
278
282
24 556a
100
Share of world
1.1
4.2
2.6
Exports of crude oil, condensate and LPG
PJ
661
92 842a
-3.0
Exports of oil and oil products
PJ
807.7
135 742a
-2.6
Note: Bbbl billion barrels, mmbbl million barrels, kb/d thousand barrels a day
a 2007 data

Source: ABARE 2009b; BP 2009a; IEA 2009a, b

47
amount could be increased in the future if unproved

oil reserves and resources can be upgraded to
proven reserves (oil considered to be recoverable
with reasonable certainty under current economic
and operating conditions). At current rates of world
production, the estimated proven oil reserves are
enough to last for around 42 years. Since the mid1980s the global reserves to production ratio has
been steady at around 40 years or more (BP 2009a)
as production is balanced as new discoveries are
made and new reserves are developed each year.
About two-thirds of total world reserves are located
in the Middle East. Four of the five countries with the
worlds largest reserves Saudi Arabia, Iran, Iraq and
Kuwait are in this region (figure 3.8). Saudi Arabia
alone accounted for 19 per cent (1552320PJ,
264Bbbl) of world reserves. Canada has the second
largest share of world oil reserves, though oil sands
totalling some 887 880 PJ (151 Bbbl) account for
around 80 per cent of these reserves. The Asia
Pacific region accounted for 3 per cent of world oil
reserves. The largest oil reserves in this region are
located in China.
Australia is ranked twenty-seventh in the world in
terms of proven oil reserves, accounting for around
0.3 per cent of global reserves.
Australia is only a small oil producer, accounting for

0.6 per cent of total oil production in 2008.
Petroleum refining
Because virtually all oil, conventional and
unconventional, needs to be processed before end
use, refinery capacity and throughput are significant
a) Oil share of primary energy consumption
World
a) Oil reserves, end 2008

48
World total oil production in 2008 was some

30.5Bbbl (equivalent to around 174 012 PJ).
Production of crude oil represents more than 90 per
cent of total oil production, which includes crude
oil, condensate, LPG and unconventional oil. The
major oil producers are located in the Middle East,
with a 31 per cent share of world production. Saudi
Arabia is the largest single producer, accounting
for around 13 per cent of world production (figure
3.8). The Russian Federation is also a major
producer (12 per cent). Other Former Soviet Union
countries (particularly Azerbaijan, Kazakhstan and
Turkmenistan) and Africa (particularly Angola and
Sudan) are also becoming important oil producing
regions. Over the period 2000 to 2008, production
from these two regions grew at an average annual
rate of around 7 per cent and 5 per cent respectively.
Saudi Arabia
OECD
Canada
Iran
Non-OECD
Iraq
Kuwait
OPEC
Venezuela
United Arab Emirates
Russian Federation
Australia
Libya
0
Kazakhstan
20
40
60
Australia
0
50
100
150
200
250
300
b) Transport sector share of oil consumption
Billion bbls
World
b) Oil production, 2008

Saudi Arabia
OECD
Russian Federation
United States
Non-OECD
Iran
China
OPEC
Mexico
Canada
Kuwait
Australia
Venezuela
0

Australia
20
40
1000
2000
3000
60
80
AERA 3.8
4000
1971
Million bbls
2007
AERA 3.9
Figure 3.8 World oil reserves and production, major

countries, 2008
Figure 3.9 Oil share of total energy consumption and

transport sector usage
Source: BP 2009a; IEA 2009a
Source: IEA 2009a; 2009b
C H A PTE R 3: OIL
Table 3.2 World refinery capacities and petroleum production, 2008

Refinery capacities
(kb/d)
Share of world
capacity (%)
Refinery output
(kb/d)
Share of world
production (%)
Asia Pacific
25 098
28.3
22 653
28.0
North America
21 035
23.7
21 567
26.7
Europe
17 007
19.2
16 071
19.9
Former Soviet Union
8079
9.1
6172
7.6
Middle East
7592
8.6
6493
8.0
Latin America
6588
7.4
5434
6.7
Africa
3228
3.6
2466
3.0
World
88 627
100.0
80 856
100.0
734
0.8
684
0.8
Australia
Note: Includes capacity and production from unconventional oil

Source: BP 2009a; IEA 2009a
indicators of supply of end use products. Table 3.2

summarises world refining capacity and production,
by region.
Consumption
a) Oil consumption, by region
25
20
Billion bbls
The largest share, accounting for around 28 per cent

of world refinery capacity and output, is in the Asia
Pacific region. China, Japan, India and the Republic of
Korea are the major producers of refined products in
the region, although Japan and the Republic of Korea
rely almost entirely on imported crude oil. The largest
single producer is the United States, accounting
for more than 20 per cent of world production of oil
products. Australia accounted for less than 1 per
cent of world refining capacity and production.
30
15
10
0
1971
1977
Figure 3.10 shows world oil consumption by region.

North America and the Asia Pacific are the major
consuming regions, responsible for nearly 60 per cent
of world oil consumption in 2008. Oil consumption in
non-OECD countries has grown more rapidly than the
world average, at an average rate of 3 per cent per
year between 1971 and 2008. The fastest growing
oil consuming region is non-OECD Asia, growing at an
1989
1995
2001
2007
Year
Oil is an important energy source, currently

accounting for around 34 per cent of world primary
energy requirements. However, its share of primary
energy has been declining steadily since the 1970s
from around 45 per cent (figure 3.9). World oil
consumption grew at a moderate rate of around 1.5
per cent per year between 1971 and 2008 whereas
primary energy consumption grew at 2.2 per cent per
year over the same period.
More than 50 per cent of world oil consumption is
currently used in the transport sector, compared with
less than 40 per cent in the early 1970s (figure 3.9).
In contrast, the global shares of oil consumption in
the industry and electricity generation sectors have
been steadily declining over the past twenty years. In
2007, the industry and electricity generation sectors
accounted for 8 per cent and 7 per cent respectively
of total oil consumption. Around 14 per cent of world
oil consumption is used as non-energy feedstock.
1983
Non-OECD
Europe
OECD Asia Pacific
Africa
OECD Europe
Former Soviet
Union
Non-OECD
Asia Pacific
Latin America
OECD North
America
Middle East
b) Oil consumption, 2008

United States
China
Middle East
Latin America
Japan
Africa
India
Russian Federation
Germany
Brazil
Canada
Korea
France
Australia
AERA 3.10
2000
4000
6000
8000
Million bbls
Figure 3.10 World oil consumption

Source: IEA 2009a
49
Table 3.3 World oil trade by region, 2008
Shares
%
To
Asia
Pacific
North
America
Europe
Latin
America
Africa
Australasia
unknown
World
exports
Middle East
63
18
Africa
19
19
60
12
11
37
22
27
Former Soviet
Union
15
47
40
15
North America
Asia Pacific
31
42
11
19
12
80
10
Latin America
From
17
Europe
24
34
Australasia
Unknown
World imports
Source: BP 2009a
40
26
25
100
average rate of more than 5 per cent per year over

the same period.
Australia is ranked twenty-second in the world in
terms of oil consumption, accounting for around
1 per cent of the world total. Almost 70 per cent is
consumed in the transport sector, while 8 per cent
is used as non-energy feedstock.
Trade
50
Given the significant separation of major producing

and major consuming countries, there is a substantial
level of trade in oil. Over the past twenty years oil
trade has increased as oil production reserves in
the Asia Pacific region and North America failed to
keep pace with growth in demand. In the mid-1980s,
around 40 per cent of world oil consumption was
supplied through international trade. This increased
to around 65 per cent in 2008.
World oil trade in 2008 was 67.3 million barrels per
day (IEA 2009a). The largest export region was the
Middle East, which accounted for around 37 per cent
of world oil exports (table 3.3). Africa and the Former
Soviet Union countries together accounted for 30 per
cent of world oil exports. The largest importer of oil,
the Asia Pacific region, accounted for around 40
per cent of world oil trade in 2008. North America
and Europe together accounted for about half of
world trade.
In 2008, around 63 per cent of Asia Pacific oil
imports were sourced from the Middle East and
regional trade within the Asia Pacific accounted for
a further 19 per cent. In North America, 31 per
cent of imports are sourced from within the region,
specifically oil exports from Canada and Mexico to
the United States. Significant quantities of oil are
imported into North America from Latin America, the
Middle East and Africa. The majority of the Europes
imports are sourced from the Former Soviet Union,
Africa and the Middle East.
Australia is a net importer of crude oil and

condensate and of refined oil products, but is a net
exporter of LPG. Since the mid-1990s, Australias
imports of crude oil from the Middle East have
been gradually declining and have been increasingly
sourced from South-East Asia, mainly from Vietnam.
World oil market outlook

In its reference scenario, the IEA projects world
demand for primary oil and the supply to meet
that demand to both grow by 1 per cent per year,
from 29 645 mmbbl (169 297 PJ) in 2008 to
36820mmbbl (210 271 PJ) in 2030 (table 3.4).
Oil demand in non-OECD economies is expected
to grow at a faster rate than in OECD economies.
By 2030, non-OECD economies are expected to
represent more than half of world oil demand, up
from 41 per cent in 2008.
The majority of the increase is expected to be
supplied by OPEC countries, where significant proven
reserves of conventional crude oil exist. OPECs
share of world oil supply could increase from around
44 per cent in 2008 to 52 per cent in 2030.
Some 52 per cent of the oil was used in the transport
sector in 2008. This share is expected to rise
further to 57 per cent in 2030. Viable alternatives
for transport fuels are expected to remain relatively
limited throughout the outlook period, while the share
of oil use in other sectors, including industry and
electricity generation, is expected to decline further.
Production of conventional oil, including crude oil and
condensate, is expected to slow towards the end of
the outlook period. To meet oil demand, increased
production is expected to come from unconventional
sources, mainly oil sands, extra-heavy oil, gas-toliquids and coal-to-liquids. As a result, the share of
unconventional oil is expected to rise from 2 per cent
in 2008 to 7 per cent in 2030.
C H A PTE R 3: OIL
Table 3.4 World oil outlook from IEA reference casea

World oil supply
unit
2008
2030
PJ
169 097
210 271
mmbbl
29 610
36 820
Share of OPEC supply
43.7
52.2
Share of supply from

unconventional oil
2.1
7.0
Annual growth 200830
World primary
oil demand
PJ
169 297
210 271
mmbbl
29 645
36 820
Share of non-OECD
demand
41.3
53.4
Share of transport
sector demand
52.0
57.0
Annual growth 200830
LPG
6210 PJ
1475 mmbbl
Crude oil
8414 PJ
1431 mmbbl
1.0
Condensate
16 170 PJ
2750 mmbbl
AERA 3.11
1.0
a Data are converted from million barrels per day to million barrels
by multiplying with 350, factor that is consistent with BP (2009a).
Source: IEA 2009c
The IEA projects world demand for energy to grow

more slowly under its 450 scenario in which countries
take coordinated action to restrict the rise in global
temperatures to 2C and stabilise the greenhouse
gases in the Earths atmosphere to around 450 parts
per million carbon dioxide-equivalent (IEA 2009c).
Under this scenario the IEA projects oil demand to
grow at an average rate of 0.2 per cent per year to
reach 31 240 mmbbl in 2030 (down 15 per cent
on the reference case). In the IEAs 450 scenario
demand growth is driven primarily by China (averaging
2.7 per cent per year) and to a lesser extent other
developing countries while demand reduces in the
United States and other OECD countries. In this
scenario the IEA predicts savings in transport fuel
consumption through efficiencies and greater use
of electric and hybrid vehicles and a greater
contribution from second-generation biofuels
after 2020 (IEA 2009c).
3.3 Australias oil resources

and market
3.3.1 Crude oil resources
Australias crude oil resources were estimated
at 8414 PJ (1431 mmbbl) as at 1 January 2009.
Crude oil represents 27 per cent of liquid petroleum
resources with the remainder being made up of
condensate (16 170 PJ, 53 per cent) and naturallyoccurring LPG (6210 PJ, 20 per cent) (figure 3.11).
As shown in table 3.5, most of Australias identified
crude oil resource is in the economic demonstrated
resource (EDR) category and only a small volume is
considered sub-economic given current relatively high
oil prices.
Figure 3.11 Australias liquid petroleum resources by

energy content and volume as at 1 January 2009
Source: Geoscience Australia 2009a
Resource classification is more fully discussed

in Appendix D, but note that EDR are resources
with the highest levels of geological and economic
certainty and include remaining proved plus probable
commercial reserves of petroleum. Sub-economic
Demonstrated Resources (SDR) are resources
for which profitable extraction has not yet been
established. Inferred Resources are those with a
lower level of confidence that have been inferred
from more limited geological evidence and assumed
but not verified.
An additional but uncertain resource is represented
by the volumes of crude oil that could be produced
from existing fields by the application of enhanced
oil recovery (EOR) technologies such as miscible
gas flooding (e.g. using nitrogen or carbon dioxide).
These methods can increase the oil recovery factor
significantly beyond the 3050 per cent typically
recovered using combined primary and second
recovery methods. However, EOR depends heavily
on the availability and cost of miscible gases (Wright
et al. 1990) and is not currently undertaken at any
Australian oil field. Reserves growth (Geoscience
Australia, 2001, 2004, 2005) in existing fields is
another potential source of additional crude oil
resources.
Table 3.5 Australian crude oil resources represented
as McKelvey classification estimates as at 1 January
2009
Crude Oil Resources
PJ
mmbbl
Economic Demonstrated Resources
6950
1182
Sub-economic Demonstrated
Resources
1464
249
Total
8414
1431
51
Most (72 per cent) of the remaining identified crude

oil resource is located in the Carnarvon (4839 PJ)
and Bonaparte (1205 PJ) basins. Despite its 40
years of production, the Gippsland Basin remains a
significant resource (1700 PJ) with smaller volumes
in a number of onshore (Cooper-Eromanga, BowenSurat and Amadeus) and offshore (Browse, Perth and
Bass) basins (figure 3.12).
While crude oil resources are identified across nine
basins and through much of the stratigraphic column
the significant volumes are restricted to the offshore
Mesozoic basins on the northwest margin and in Bass
Strait. The onshore basins contribute only about 5 per
cent of the total crude oil resources.
Australias remaining identified crude oil resources
are dwarfed by past production which has come
mainly from a few super-giant fields in the Gippsland
Basin and the Barrow Island field in the Carnarvon
Basin, all discovered in the 1960s (figure 3.13).
Many much smaller oil fields have been found since,
mostly in the Carnarvon and Bonaparte basins.
The impact of these initial discoveries on crude oil
resources and the reserves to production ratio is
illustrated in figures 3.14 and 3.15.
The reserves to production (R/P) ratio has been
relatively steady at around 7 to 10 years since the
120
1980s. However, it must be recognised that both

production volumes and reserves have declined
markedly in recent years. To date, around 80 per cent
of the crude oil reserves discovered in Australia have
been produced.
3.3.2 Condensate resources

Condensate exists as a hydrocarbon gas in the subsurface reservoir that condenses to a light oil at the
surface when a gas (or a gas and oil) accumulation
is produced. Condensate now represents more than
half of Australias remaining liquid hydrocarbon
resources. In 2008 the demonstrated condensate
resource totalled 16 170 PJ (2750 mmbbls) most of
which was assessed as EDR (table 3.6).
Table 3.6 Australian condensate resources
represented as McKelvey classification estimates
as at 1 January 2009
Condensate Resources
PJ
mmbbl
12 560
2136
Resources
3610
614
Total
16 170
2750
130
140
150
BONAPARTE BASIN
52
Produced: 2540
Remaining: 1205
10
DARWIN
750 km
BROWSE BASIN
Produced: 0
Remaining: 82
CANNING BASIN
Produced: 18
Remaining: 0
20
CARNARVON BASIN
Produced: 8643
Remaining: 4839
AMADEUS BASIN
Produced: 100
Remaining: 24
Produced: 1629
Remaining: 370
BOWEN/SURAT BASINS
BRISBANE
Produced: 194
Remaining: 41
PERTH BASIN
Produced: 141
Remaining: 76
30
PERTH
SYDNEY
ADELAIDE
Crude oil
Total production calculated
(as at 2008 in PJ)
Remaining resource (EDR + SDR)
calculated (as at 2008 in PJ)
GIPPSLAND BASIN
Produced: 21 929
Remaining: 1700
MELBOURNE
Oil pipeline
Oil pipeline
(proposed)
BASS BASIN
Produced: 0
Remaining: 76
Oil basin
HOBART
40
AERA 3.12
Figure 3.12 Australias known crude oil resources, by basin and oil pipelines
C H A PTE R 3: OIL
Crude oil discovered per annum (mmbbl)
Condensate resources are located across ten basins,

but the offshore basins along the North West Shelf
Bonaparte, Browse and Carnarvon contain 92
per cent of the resource (figure 3.16). Similarly, the
bulk of this resource is contained in a small number
of giant wet gas fields. The undeveloped Ichthys
gas resource in the Browse Basin, for example, is
estimated to contain 3099PJ (527mmbbls) or 19
per cent of Australias condensate resources; and is
the largest liquid hydrocarbon resource found since

the Bass Strait oil fields in the Gippsland Basin in
the 1960s.
Proportionally the Carnarvon Basin gas fields tend
to be leaner in condensate than those in the Browse
and Bonaparte basins due to the dominance of
the super-giant dry gas accumulations of Io-Jansz
and Scarborough.
The identified condensate resource has an energy
content that is less than 10 per cent that of
the associated gas resource, but has strategic
importance as it constitutes more than half of
3000
600
2500
500
2000
400
1500
300
1000
200
500
100
Cumulative number of discoveries
As most Australian crude oils are light, sweet crudes

and are very similar to the condensate produced from
gas fields, both are considered to have equivalent
energy value per volume (5.88 PJ/mmbbl) in this report.
53
0
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
Year
Figure 3.13 Australias crude oil discoveries, annual discovered volume (blue columns) and cumulative number
of discoveries, 19602008
Crude oil (annual discovered volume mmbbl)
Discoveries (cumulative number)
AERA 3.13
16 000
14 000
12 000
PJ
10 000
8000
6000
4000
Crude resources
Crude EDR
2000
AERA 3.14
0
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
2004
2008
Year
Figure 3.14 Australian crude oil resources and economic demonstrated resources (EDR), 19642008
Australias liquid fuel resource. Access to this

resource requires development of the giant wet
gas fields which in several cases also contain
considerable volumes of carbon dioxide (CO2).
Australias condensate resources have grown

substantially since the discovery of the super-giant
and giant gas fields along the North West Shelf in the
early 1970s (North Rankin in the Carnarvon Basin,
80
70
60
Years
50
40
30
20
10
AERA 3.15
0
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
2004
2008
Year
Figure 3.15 Australian crude oil reserves to production ratio in years of remaining production, 19642008
120
130
140
150
BONAPARTE BASIN
Produced: 592
Remaining: 2799
54
DARWIN
750 km
10
BROWSE BASIN
Produced: 0
Remaining: 6286
CARNARVON BASIN
Produced: 3365
Remaining: 5892
20
AMADEUS BASIN
Produced: 6
Remaining: 12
BOWEN/SURAT BASINS
Produced: 48
Remaining: 12
Produced: 585
Remaining: 88
PERTH BASIN
Produced: 2
Remaining: 0.2
BRISBANE
30
PERTH
SYDNEY
ADELAIDE
OTWAY BASIN
Condensate
(as at 2008 in PJ)
calculated (as at 2008 in PJ)
Gas basin
Produced: 11
Remaining: 82
MELBOURNE
GIPPSLAND BASIN
Gas pipeline
Produced: 1182
Remaining: 753
Gas pipeline
(proposed) BASS BASIN
Oil pipeline
Produced: 11
Remaining: 247
HOBART
40
AERA 3.16
Figure 3.16 Australias known condensate resources by basin, and gas and oil pipelines
C H A PTE R 3: OIL
assessed as EDR (table 3.7). LPG represents 20

per cent of Australias liquid hydrocarbon resource in
energy content terms. LPG is less energy dense than
crude oil and condensate. Hence, though Australias
naturally-occurring LPG now volumetrically exceeds
the crude oil resource, the crude oil has a higher
energy content (8414 PJ in 1431 mmbbls of crude
oil, compared with 6210 PJ in 1475 mmbbls of LPG).
Scott Reef (Torosa) in the Browse Basin, Sunrise in

the Bonaparte Basin). The big step in the condensate
EDR in 2008 (figure 3.17) is largely due to the
promotion of Ichthys into this category.
The EDR to production ratio of condensate since
1980 has mostly been between 20 and 50 years,
apart from a peak in the early 1980s (figure 3.18).
In 2008 at current levels of production Australia had
about 30 years of condensate reserves remaining.
LPG is a mixture of light hydrocarbons that is normally

a gas in subsurface reservoirs and at the surface.
However, LPG is stored and transported as a liquid
under pressure and forms part of Australias liquid
fuel supply. In addition to the LPG occurring naturally
in gas and oil fields, LPG is also produced during the
refining of crude oil.
3.3.3 LPG resources

The identified resource of naturally-occurring liquid
petroleum gas (LPG) in 2008 was estimated at
6210PJ (1475 mmbbls), most of which was
18 000
16 000
Condensate EDR
14 000
12 000
PJ
10 000
8000
6000
4000
55
2000
AERA 3.17
0
1964
1968
1972
1976
1980
1984
Figure 3.17 Australias identified condensate resources
1988
1992
1996
2000
2004
2008
Year
Years
100
50
AERA 3.18
0
1972
1976
1980
1984
1988
1992
1996
2000
2004
2008
Year
Figure 3.18 Condensate EDR to production ratio in years of remaining production

Table 3.7 Australian naturally-occurring LPG

resources represented as McKelvey classification
estimates as at 1 January 2009
LPG Resources
PJ
mmbbl
4613
1096
Resources
1597
379
Total
6210
1475
Naturally-occurring LPG resources are identified in

eight basins (figure 3.19). The distribution of LPG
is similar to that of condensate with the Carnarvon,
Browse and Bonaparte basins again dominating (85
per cent of the remaining resource). The resource in
the Gippsland Basin remains significant (10 per cent
of the total) even though this represents only about a
quarter of the initial resource.
In 2008 at current levels of production, Australia had
20 years of naturally-occurring LPG remaining.
3.3.4 Shale oil resources

Australia has significant potential unconventional oil
resources contained in oil shale deposits in several
basins. Oil shale is essentially a petroleum source
rock which has not undergone the complete thermal
maturation required to convert organic matter to
120
56
oil. In addition, the further geological processes

of explusion, migration and accumulation which
produce conventional crude oil resources trapped
in subsurface reservoirs have not occurred. The
unconventional shale oil resource can be transformed
into liquid hydrocarbons by mining, crushing, heating,
processing and refining, or by in situ heating, oil
extraction and refining (box 3.2).
Australias total identified energy resource contained
in oil shale was estimated at 131 600 PJ (22 390
mmbbl) in 2009 (table 3.8). However, all of this was
classified as either recoverable contingent (84 600
PJ, 14 387 mmbbl) or inferred (47 000 PJ, 8003
mmbbl) resources. This is a large unconventional
oil resource.
Table 3.8 Australian shale oil resources represented as
McKelvey classification estimates as at 1 January 2009
Shale Oil Resources
Resources
PJ
mmbbl
84 600
14 387
Inferred Resources*
47 000
8 003
Total
131 600
22 390
* The total inferred resource does not include a total potential

low grade shale oil resource of the Toolebuc Formation,
Queensland estimated to be about 9 061 100 PJ (equivalent to
1541000mmbbls, 245 000 GL) by BMR and CSIRO in 1983.
Source: Geoscience Australia 2009b
130
140
150
BONAPARTE BASIN
Produced: 232
Remaining: 1193
10
DARWIN
750 km
BROWSE BASIN
Produced: 0
Remaining: 1391
CARNARVON BASIN
Produced: 1349
Remaining: 2603
20
AMADEUS BASIN
Produced: 6
Remaining: 0.8
BOWEN/SURAT BASINS
Produced: 47
Remaining: 10
Produced: 642
Remaining: 125
BRISBANE
30
PERTH
SYDNEY
ADELAIDE
LPG resources
LPG produced in PJ
LPG remaining resource
in PJ
Gas basin
MELBOURNE
Gas pipeline
Gas pipeline (proposed)
Oil pipeline
Oil pipeline (proposed)
GIPPSLAND BASIN
Produced: 2427
Remaining: 646
BASS BASIN
Produced: 5
Remaining: 241
HOBART
40
AERA 3.19
Figure 3.19 Australias LPG resources by basin

C H A PTE R 3: OIL
Box 3.2 Shale Oil
Resources
Oil shale is a significant but largely unutilised source
of hydrocarbons (shale oil). Total world in-situ shale
oil resources were estimated in 2005 (the last year
for which world oil shale market data are available)
to be around 16.62 million PJ (2826 billion bbl) in
27 countries (WEC 2007). Most of the resource
is located in the Green River oil shale deposit in
the United States. The USGS estimates the Green
River oil shale to contain 1525 billion barrels of oil
in-place in some seventeen oil shale zones (Johnson
et al. 2009). Other countries with significant shale
oil resources are the Russian Federation, the
Democratic Republic of Congo, Brazil, Italy, Morocco,
Jordan, Australia and Estonia. The total recoverable
shale oil resource was estimated at about
6.27million PJ (1067 Bbbl). Australia is estimated
to have about 1.3 per cent of world recoverable
shale oil resources.
Production
Small scale production of hydrocabons (kerosene,
lamp oil, fuel oil, and other products) from oil shale
began in several countries in the late 1800s including
Australia with production from the torbanite deposits
at Joadja Creek near Lithgow and at Glen Davis (both
in New South Wales) from 1865. This production
continued through World War II until 1952. There
was also production in the period 191034 from
the Mersey River tasmanite deposits in Tasmania.
Production in most western countries ceased after
World War II because of the availability of cheaper
supplies of conventional crude oil. However,
production continued in Estonia, the then USSR,
China and Brazil, peaking at 46 Mt of oil shale per
year in 1980 (WEC 2007). Total recorded shale
oil production in 2005 was about 5.014 mmbbl,
comprising 2.529 mmbbl from Estonia, 1.319
mmbbl from China and 1.165 mmbbl from Brazil. In
2008 production of shale oil was limited to Estonia,
China, and Brazil with several countries, including
Israel, Morocco, Thailand and the United States,
investigating the potential production of shale oil or
use of oil shale in electricity generation (WEC 2009).
Geology and extraction

Oil shale deposits range in age from Cambrian
to Cenozoic and were formed in a wide range of
depositional environments ranging from freshwater
and saline ponds and lakes commonly associated
with coastal swamps (including peat swamps) to
broad marine basins. Oil shales have a wide range of
organic and mineral compositions and are classified
according to their depositional environment, either
terrestrial, lacustrine or marine. Terrestrial oil
shales are composed mostly of resins and other
lipid-rich (naturally-occurring molecules that include
fats, waxes and sterols) organic matter and plant
material. Lacustrine oil shales (known as lamosite
and torbanite) contain lipid-rich material derived from

algae, whereas marine oil shales (tasmanite and
marinite) are composed of lipid-rich derived from
marine algae and other marine micro-organisms.
The organic matter in oil shale (which contains
small amounts of sulphur and nitrogen in addition to
carbon, hydrogen and oxygen) is insoluble in common
organic solvents and is mixed with variable amounts
of mineral matter, mostly silicate and carbonate
minerals. There are currently two main methods
for recovering oil from oil shale. The first involves
mining (commonly by open-cut means) and crushing
the shale, and then retorting (heating) it, typically
in the absence of oxygen, to about 500C. A large
number of oil shale retorting technologies have been
proposed but only a limited number are in commercial
use. A second, more recent approach involves insitu extraction of shale oil by gradually heating the
rocks over a period of years to convert the kerogen.
Both approaches rely on the chemical process of
pyrolysis which converts the kerogen in the oil shale
to shale oil (synthetic crude oil), gas and a solid
residue. Conversion begins at lower temperatures
but proceeds faster and more completely at higher
temperatures.
Renewed interest in shale oil in recent years
has prompted ongoing research into extraction
technologies. A large number of technologies have
been proposed and many trialled to produce shale
oil. A report by the United States Department
of Energy summarises those currently being
investigated to produce shale oil (USDOE 2007).
In-situ methods include injecting hot fluids (steam or
hot gasses) into the shale formation via drill holes or
heating using elements or pipes drilled into the shale
with the heat conducted beyond the walls. Other
approaches rely on heating volumes of shale using
radio waves or electric currents. In-situ extraction
has been reported to require less processing of the
resultant fuels before refining but the process uses
substantial amounts of energy. Both methods use
substantial amounts of water and typically produce
more greenhouse gases than does extraction of
conventional crude oil. Currently over 30 companies
in the United States are investing in the development
of commercial-scale surface and in-situ processing
technologies with several companies testing in-situ
technologies to extract shale oil at more than 300 m
depth (USDOE 2007).
Australia
There is no oil being extracted from oil shale
in Australia. From 2000 to 2004, the Stage 1
demonstration-scale processing plant at the Stuart
deposit near Gladstone in central Queensland
produced more than 1.5 mmbbl of oil using a
horizontal rotating kiln process (Alberta Taciuk
57
Process). No oil has been produced since

2004. The demonstration plant achieved stable
production capacity of 6000 t of shale per day
and oil yield totalling 4500 bbls per stream day
while maintaining product quality and adhering to
Environment Protection Authority emissions limits.
The demonstration plant produced Ultra Low Sulphur
Naphtha (ULSN), accounting for about 55 to 60 per
cent of the output and Light Fuel Oil, about 40 to 45
per cent of output. The ULSN, which can be used
to make petrol, diesel and jet fuel, had a very low
sulphur content of less than 1 part per million.
Since acquiring the Stuart oil shale project,
Queensland Energy Resources has undertaken
a detailed testing program of processing of the
The majority of Australian shale oil resources of
commercial interest are located in Queensland, in the
vicinity of Gladstone and Mackay (figure 3.20). Thick
Cenozoic lacustrine oil shale deposits (lamosite) of
commercial interest are predominantly in a series of
narrow and deep extensional basins near Gladstone
and Mackay. From 1999 to 2003, oil was produced
at a demonstration-scale processing plant (referred to
as the Stuart Oil Shale Project) at the Stuart deposit
120
58
Queensland oil shale at a pilot plant in Colorado,

United States and successfully demonstrated the
use of the Paraho II vertical kiln technology to extract
shale oil (WEC 2009). The company is currently
examining a proposal for the construction of a smallscale technology demonstration plant at the Stuart
site using the Paraho technology (www.qer.com).
In 2008, the Queensland Government prohibited
shale oil mining at the McFarlane (formerly
Condor) deposit near Proserpine for 20 years. The
Queensland Government is currently undertaking
a two-year review on whether the oil shale industry
should be developed in the state. Other Australian
oil shale industry developments are summarised
elsewhere (Geoscience Australia 2009b).
in the Narrows Basin, near Gladstone. The oil shales
are graded from about 60 litres per tonne at zero per
cent moisture (LTOM) to over 200 LTOM, comfortably
above the 50 LTOM cut-off generally regarded as the
minimum required for profitable operation.
Oil shale deposits of varying quality also occur in
New South Wales, Tasmania, and Western Australia
in sedimentary sequences of Permian, Cretaceous
130
140
150
DARWIN
750 km
10
McFarlane
Julia Creek
Rundle
Bungobine
Stuart
Duaringa
20
Alpha
Yaamba
Nagoorin South
Nagoorin
Lowmead
BRISBANE
PERTH
30
SYDNEY
ADELAIDE
Shale oil
Demonstrated Resources Undifferentiated (in PJ)
MELBOURNE
Inferred resources (in PJ)

Oil shale basin
HOBART
40
Oil shale occurence

AERA 3.20
Figure 3.20 Distribution of Australian indicated shale oil resources

C H A PTE R 3: OIL
and Cenozoic age. There was some modest scale

production from two of these deposits for periods up
to the 1950s.
A potential shale oil resource of approximately
1541000 million barrels (9 061 086 PJ) was
estimated for the Toolebuc Formation in northwestern Queensland by the then Bureau of Mineral
Resources (now Geoscience Australia) and the CSIRO
(Ozimic and Saxby 1983). The Toolebuc Formation
is very widespread but, at an average 37 LTOM,
the resource is considered very low grade. It is not
counted among the resources in table 3.8.
Increased breakeven
price required
Smaller volumes,
easy to develop
Larger
volumes,
difficult to
develop
120
BONAPARTE BASIN
22 380 PJ
(~2700 mmbbls condensate,
1500 mmbbls LPG)
AERA 3.21
Figure 3.21 Australian oil resource pyramid

Source: Geoscience Australia (adapted from McCabe 1998 and
Branan 2008)
enhanced oil recovery (EOR), options for future liquid

fuel supply also include gas-to-liquids (GTL), coalto-liquids (CTL) and biofuels which are discussed in
other chapters in this assessment.
130

LPG remaining: 1193
8414 PJ
(~1400 mmbbls)
Crude oil
131 600 PJ (~22 000 mmbbls)

Contingent and inferred resource Shale Oil
6468 PJ
1100 mmbbls
(estimate of scope for EOR in discovered fields)
3.3.5 Total oil resources

Australias oil resources are predominantly made
up of conventional liquid hydrocarbons. Crude oil
reserves are in decline, but there is a substantial
remaining resource of condensate and naturallyoccurring LPG associated with undeveloped offshore
gas fields. Oil shale deposits contain a large,
unconventional resource which does not currently add
to Australias liquid fuel supplies. Apart from
requirements
140
150
10
DARWIN
BROWSE BASIN
Total produced: 0
LPG remaining: 1391
750 km
59
CANNING BASIN
Total produced: 18
20
AMADEUS BASIN
CARNARVON BASIN
Total produced: 112

LPG remaining: 0.8

LPG remaining: 2603
LPG remaining: 125
PERTH BASIN
Total produced: 143

Condensate remaining: 0.2
BRISBANE
BOWEN/SURAT BASINS
Total produced: 289

LPG remaining: 10
PERTH
SYDNEY
ADELAIDE
Liquid hydrocarbon (Crude Oil, Condensate

& LPG) resources in PJ
MELBOURNE
Past production
Petroleum basin
Crude oil resources
Gas pipeline
LPG resources
30
OTWAY BASIN
Total produced: 11
Gas pipeline
(proposed)
Oil pipeline
BASS BASIN
Total produced: 16
LPG remaining: 241
HOBART
GIPPSLAND BASIN
40

LPG remaining: 646
AERA 3.22
Figure 3.22 Australian crude oil, condensate and naturally-occurring LPG resources, infrastructure, past production
and remaining resources
Table 3.9 Crude oil, condensate and LPG McKelvey classification estimates by basin as at 1 January 2009
McKelvey
Class.
Basin
Total
energy
PJ
PJ
mmbbl
PJ
mmbbl
PJ
mmbbl
EDR
Carnarvon
12 464
4405
749
5457
928
2602
618
EDR
Browse
3957
3957
673
EDR
Bonaparte
4131
676
115
2264
385
1191
283
EDR
Gippsland
2626
1353
230
629
107
644
153
EDR
Other
Total EDR
Crude Oil
Condensate
LPG
945
516
88
253
43
176
42
24 123
6950
1182
12 560
2136
4613
1096
SDR
Carnarvon
868
434
74
434
74
SDR
Browse
3797
82
14
2327
396
1389
330
SDR
Bonaparte
1063
529
90
534
91
SDR
Gippsland
470
348
59
122
21
SDR
Other
473
71
12
193
32
209
49
6671
1464
249
3610
614
1597
379
30 794
8414
1431
16 170
2750
6210
1475
Total SDR
Total EDR + SDR
The resource pyramid (figure 3.21) highlights how

a smaller volume of more readily accessible, high
quality resources are underpinned by larger but less
accessible resources. However, these unconventional
oil resources come with development costs and
risks. Technology, price and their own environmental
impacts can influence access to them.
60
Conventional hydrocarbon liquid resources are located

across ten basins but most remaining resources are
in the Carnarvon, Browse and Bonaparte basins (table
3.9). The initial liquid resources of the Carnarvon
Basin were nearly equivalent to those of the crude oilrich Gippsland Basin (figures 3.22 and 3.12).
3.3.6 Oil market

Oil production
Most of Australias current crude oil production is from
the mature oil provinces the Carnarvon and Gippsland
basins which in 200708 accounted for 62 per cent
and 18 per cent respectively of crude oil production.
The Gippsland Basin also accounts for almost half of
Australias naturally-occurring LPG production, although
this has been declining steadily since production
peaked in the mid-1980s (figure 3.23).
Australias annual crude oil production progressively
declined between 198586 and 199899 from
1102 PJ to 738 PJ (187.4 to 125.2 mmbbl, 29 794
to 19 905 ML). However, following the start-up of a
number of new oil fields, including the Laminaria/
Corallina, Elang/Kakatua and Cossack/Wanaea
fields (all offshore north-western Australia), oil
production increased rapidly, peaking at 1209 PJ
(205.7 mmbbl, 32 704 ML) in 200001. Since then,
crude oil production has declined at a rate of 7 per
cent per year, to 697 PJ (117 mmbbl, 18 602 ML) in
200708.
Domestic production of condensate increased from

around 36 PJ (6.1 mmbbl, 1096 ML) in the first year
of production in 198283 to 257 PJ (43.7 mmbbl,
6949ML) in 200708, with production reaching
316PJ (53.7 mmbbl, 8544 ML) in 200203.
Naturally-occurring LPG production in Australia also
increased from around 80 PJ (19 mmbbl, 3021ML)
in 197980 to 125 PJ (29.7 mmbbl, 4721 ML)
in 200506, mainly from the Carnarvon Basin in
Western Australia. In 200708, LPG production
declined to 105 PJ (25.6 mmbbl, 4072 ML).
Over the past four years, a number of oil projects
have been developed, with six fields in the Carnarvon
Basin and one each in the Perth and Bonaparte
basins. The eight fields have a production capacity in
excess of 350 thousands of barrels per day (kbpd,
table 3.10).
The Cliff Head development represents the first and
currently the only offshore producing oil field in the
Perth Basin. The Cliff Head field is modest in size
(around 10 mmbbls), the accumulations size having
been revised downwards following further appraisal
drilling. The decision to develop the field occurred
during a period of rising oil prices that helped offset
the impact of this appraisal drilling. The Enfield,
Stybarrow and Vincent fields, all located in the deeper
waters of the offshore Exmouth Sub-basin, Carnarvon
Basin (figure 3.24), signal the addition of a significant
new oil producing area for Australia: recoverable
crude oil volumes across a dozen fields total around
half a billion barrels.
In contrast to the nearly 6 billion barrels of
conventional oil produced in Australia since the
1960s, only a few million barrels have been produced
from oil shale. There was intermittent and small scale
production from 1865 to 1952 when there was no
indigenous conventional crude oil production. Another
C H A PTE R 3: OIL
35 000
a) Crude oil
9000
b) Condensate
8000
30 000
7000
25 000
6000
ML
ML
20 000
15 000
5000
4000
3000
10 000
2000
5000
1000
0
1983-84
1987-88
1991-92
1995-96
1999-00
2003-04
0
1983-84
2007-08
1987-88
1991-92
Year
5000
45 000
4500
40 000
4000
35 000
3500
2003-04
1999-00
2003-04
2007-08
d) Total primary oil
30 000
ML
3000
ML
1999-00
Year
c) LPG
2500
2000
25 000
20 000
15 000
1500
1000
10 000
500
5000
0
1983-84
1995-96
1987-88
1991-92
1995-96
1999-00
2003-04
0
1983-84
2007-08
AERA 3.23
1987-88
1991-92
Year
Northern
Territory
1995-96
2007-08
Year
South
Australia
Western
Australia
Queensland
Victoria
Figure 3.23 Australian oil production

Source: ABARE 2008
Table 3.10 Crude oil and condensate projects recently completed, as at October 2009
Project
Company
Basin
Start up
Capacity
Capital
Expenditure
($m)
Cliff Head oil field
ROC Oil
Perth
2006
20 kbpd
285
Enfield oil field
Woodside Energy/Mitsui
Carnarvon
2006
100 kbpd
1480
Puffin oil field
AED Oil/Sinopec
Bonaparte
2007
30 kbpd
150
Woollybutt oil field South Lobe
Tap Oil
Carnarvon
2008
68 kbpd
143
Perseus-over-Goodwyn project
Woodside Energy
Carnarvon
2008
na
800
Stybarrow oil field
BHP Billiton/Woodside
Energy
Carnarvon
2008
80 kbpd
874
Vincent oil field (stage 1)
Woodside Energy/Mitsui
Carnarvon
2008
100 kbpd
1000
Angel gas and condensate

field
Woodside/BHP Billiton/
BP/Chevron Texaco/Shell/
Japan Australia LNG
Carnarvon
2008
310 PJ pa
gas, 50 kbpd
condensate
1400
Source: ABARE; Geoscience Australia
unconventional oil resource, tar sands in the onshore

Gippsland Basin, was exploited during World War II
and in the post-war period (Bradshaw et al. 1999).
The high quality oil shale deposits in the Narrows
Basin, near Gladstone, have been the subject of pre-
development studies for several decades (McFarland

2001). The Stuart Oil Shale Project achieved
production from a demonstration-scale processing
plant in the period 1999 to 2004, producing more
than 1.5 million barrels of oil using a horizontal rotary
kiln retort (box 3.2).
61
11400'
11430'
Gas pipeline
Bathymetry contour (metres)
Gas field
100
Oil field
Griffin
100
2115'
Vincent
Stybarrow
Pyrenees
50
Enfield
20
50
2145'
NT
WA
QLD
SA
NSW
VIC
25 km
WESTERN
AUSTRALIA
EXMOUTH
TAS
AERA 3.24
Field outline information is provided by GP Info, an Encom Petroleum Information Pty Ltd product.
Figure 3.24 Oil and gas fields and bathymetry, Exmouth Sub-basin, Carnarvon Basin
Petroleum refining
The petroleum refining industry in Australia produces
a wide range of oil products, such as gasoline,
diesel, aviation fuel and LPG, from crude oil and
condensate feedstock. In 200708, Australian
refineries consumed 1333 PJ (226.7 mmbbl, 36 043
ML) of crude oil and condensate, of which imports
accounted for around 68 per cent (figure 3.25). Most
of the imports are used in the domestic petroleum
refining industry in Eastern Australia, to offset the
declining production from the Gippsland Basin.
There are seven major petroleum refineries currently

operating in Australia, managed by four companies
BP, Caltex, Mobil and Shell (table 3.11). These seven
refineries have a combined capacity of around 42.7
billion litres a year. The largest of these are BPs
Kwinana refinery in Western Australia and Caltexs
Kurnell refinery in New South Wales. A refinery at
Port Stanvac in South Australia ceased production in
Table 3.11 Australian refinery capacity
Operator
50 000
50 000
Year
commissioned
Capacity
MLpa
New South Wales

40 000
40 000
MLML
62
30 000
30 000
Clyde
Shell
1928
4930
Kurnell
Caltex
1956
7320
Queensland
Bulwer Island
20 000
20 000
1965
5110
1965
6270
Mobil
1963
(4520)
Altona
Mobil
1949
4530
Geelong
Shell
1954
6380
BP
1955
7960
South Australia
10 000
10 000
0
0
1969-70
1969-70
BP
Caltex
Lytton
Port Stanvaca
AERA 3.25
AERA 3.25
1975-76
1975-76
1981-82
1981-82
1987-88
1987-88
Year
1993-94
1993-94
1999-00
1999-00
2005-06
2005-06
Year
Imports of refinery feedstocks

Imports of refinery feedstocks
Refinery feedstock from domestic production
Refinery feedstock from domestic production
Figure 3.25 Sources of Australian refinery inputs

Source: ABARE 2009b
Victoria
Western Australia
Kwinana
Total
42 500
Notes: a The Port Stanvac refinery ceased production in July 2003;

b Total of currently operating refineries; MLpa million litres per annum
Source: Australian Institute of Petroleum 2007
C H A PTE R 3: OIL
14
2000
80
60
PJ
1500
1000
40
500
20
10
0
-1
1989-90
1992-93
1995-96
1998-99
2001-02
2004-05
2007-08
Year
16
BL
100
12
-2
The transport sector is the largest consumer of oil

products in Australia, currently accounting for around
70 per cent of total use, compared with 50 per cent
in the 1970s (figure 3.26). The increased share has
offset the decline in the industrial sectors share,
down from about 40 per cent in the 1970s to about
20 per cent in 200708.
2500
b) Refined oil products
16
14
14
12
12
10
10
-2
2007-08 $billion
Oil is second only to coal, in terms of shares in

Australian primary energy consumption. However,
its share has been declining steadily, from a high of
almost 50 per cent of primary energy use in the late
1970s to around 34 per cent in 200708. Prior to
1979, Australias primary oil consumption had grown
strongly at a rate of around 5 per cent per year.
However, since then, consumption has been growing
at a moderate rate of around 1 per cent per year
to reach 1942 PJ (347 mmbbls, 55 168 ML) in
200708 (ABARE 2009b).
BL
Consumption
a) Primary oil
2007-08 $billion
2003 and is currently under a care and maintenance

regime. This is one of the reasons behind a decline
in total refinery output, which has led to increased
imports of refined petroleum products.
-2
AERA 3.25
-4
1989-90
1992-93
1995-96
1998-99
2001-02
2004-05
-4
2007-08
Year
Volume (BL)
0
197374
AERA 3.26
197879
198384
198889
199394
199899
2003- 200704
08
Year
Total oil
consumption (PJ)
Value ($b)
Figure 3.27 Australias net oil imports volume and

value
Source: ABARE 2008 and 2009c
Transport sector share

of consumption (%)
Share of primary
energy consumption (%)
Figure 3.26 Australian oil consumption, share of total

energy consumption and transport sector consumption
Source: ABARE 2009b
Trade
Australia is a net importer of crude oil and oil products
but a net exporter of LPG. More than 60 per cent
of domestic crude oil and condensate production
(18.6billion litres, 688 PJ, 117 mmbbl) was exported
in 200708, predominantly from the Carnarvon
Basin in Western Australia to Asian refineries.
This reflects their relative proximity to the major
producing fields compared with the refineries on
Australias east coast. Australia also imported 26 billion
litres (962 PJ, 163.5mmbbl) of combined crude oil
and condensate to meet its domestic refineries
requirements. In 200708, Australias net imports

of primary oil (crude oil, condensate and LPG) were
around 7.7 billion litres (383 PJ, 48.4 mmbbl),
valued at $5.5 billion.
For most of the 1990s Australia was a net exporter
of refined oil products. Strong growth in consumption
resulted in net imports from around 19992000
(figure 3.27). However, imports increased significantly
following the closure of the Port Stanvac refinery
in 2003 and amounted to around 15 billion litres
(555PJ, 94 mmbbl) in 200708. These imports were
valued at around $12 billion.
Oil supplydemand balance

Figure 3.28 provides a supplydemand balance
for primary oil production from oil fields and
consumption in domestic refineries (refinery
feedstock). Except for a brief period in the mid-
63
1800
3.4 Outlook to 2030 for

Australias resources and market
1600
PJ
1400
1200
1000
For the purposes of this assessment, a key

assumption is that demand for oil will continue
to grow and will be met from a variety of sources
including imports, domestic conventional crude oil
and condensate production, and unconventional
sources. Given the rapid changes in the past decade
where Australia moved from net exporter to importer
of oil, further significant change is expected in the
outlook period to 2030. There will be continued
production from known fields, and the dominance
of the basins offshore north-western Australia will
be entrenched as production comes on stream from
condensate-rich gas fields such as Ichthys in the
Browse Basin, and as the newly developed Exmouth
Sub-basin of the Carnarvon Basin reaches peak
production. The major uncertainties in indigenous
oil supply are whether exploration efforts in frontier
basins will be successful in finding a new oil province;
whether discovered resources are commercialised;
and the role of unconventional oil sources (gas-toliquids, coal-to-liquids, enhanced oil recovery and
shale oil) as well as alternative transport fuels such
as biofuels.
800
600
400
200
0
1969-70
AERA 3.28
1975-76
1981-82
1987-88
1993-94
1999-00
2007-08
Year
Naturally occurring
LPG production
Crude oil
production
Condensate
production
Consumption
(refinery input)
Figure 3.28 Australian primary oil supplydemand

balance
Source: ABARE 2009b
2250
2000
1750
PJ
1500
64
1250
1000
750
500
250
AERA 3.29
0
1965-66 1971-72 1977-78 1983-84 1989-90 1995-96 2001-02 2007-08
Year
Production
(refinery output)
Consumption
Figure 3.29 Australian refined oil products supply

demand balance
Source: ABARE 2009b
1980s, Australia has relied on net imports to meet

domestic refineries needs. In 200708, refineries in
Australia used 1462 PJ of feedstock with around 25
per cent of this input met from imports.
Figure 3.29 provides a supplydemand balance for
refined oil products, that is, oil products produced
from domestic refineries to meet domestic demand
for liquid fuels. In contrast to primary oil, Australia
was generally self sufficient in terms of refined oil
products for substantial periods during the 1980s
and 1990s, because Australia had enough refinery
capacity to meet domestic demand for oil products.
Since the closure of the Port Stanvac refinery in
200203, however, net imports of oil products have
risen steadily, and in 200708 net imports accounted
for around 30 per cent of total consumption.
This outlook is affected by various factors, including

the geological characteristics of the resource (such
as location, depth, quality), economic characteristics
of the resource (such as cost), developments
in technology, infrastructure issues, fiscal and
regulatory regime, and environmental considerations.
The market price of oil is perhaps the most
important factor of all in determining the incentives
for oil exploration and development, especially for
unconventional oil resources.
Oil prices
Australia is a producer, exporter and importer of
crude oil and refined products. Since deregulation of
the oil sector in the late 1980s, Australias oil market
has been open, competitive and fully exposed to
global market conditions.
Global oil prices are subject to both short-term price
movements and longer-term price trends. Short-term
oil price movements relate to influences on demand
and supply of oil in the marketplace. These include
cyclical/seasonal oil demand, the impact of supply
disruptions such as hurricanes or sabotage, risk
premiums associated with geopolitical tensions, and
extraneous shocks to the economy such as the global
financial crisis. In domestic market terms, significant
exchange rate variations and market speculation can
also affect short-term oil price movements.
In the longer term, an important driver of oil prices
will be the underlying marginal cost of oil production,
C H A PTE R 3: OIL
140
120
Deepwater and
ultra deepwater
Oil shales
60
EOR
Arctic
80
CO2 -EOR
Production cost ($ 2000)
100
Coal to liquids
Gas to
liquids
Heavy oil
and bitumen
20
Produced
MENA
Other
conventional
oil
40
AERA 3.30
0
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10 000
Resources (billions of barrels)
Figure 3.30 Long term oil supply cost curve

Note: MENA Middle East and North Africa
Source: IEA 2008
which will have implications for oil supply, and a

combination of long term economic growth and
demand side efficiency improvements, which will
have implications for oil demand.
The IEAs representation of the availability of oil
resources and associated production costs is shown
in figure 3.30. It shows that just over 1 trillion barrels
of oil have already been produced at a cost of below
US$30 per barrel. There are potentially around 2
trillion barrels of oil remaining that can be produced
at a cost below US$40 per barrel, around threequarters of them in OPEC member countries in the
Middle East and North Africa (MENA). Reflecting its
large, low cost reserves, OPECs share of production
is projected to increase from 44 per cent in 2008 to
52 per cent by 2030 (IEA 2009c). OPECs decisions
on oil field development will become progressively
more important for the world oil market.
The importance of OPECs investment decisions will
be underpinned by the increasing cost of non-OPEC
production. The majority of new non-OPEC investment
is likely to be in offshore oil fields, increasingly in
deeper water, further below the seabed and a greater
distance from shore (including fields within the Arctic
circle). The cost of oil production from deepwater
sources and those needing advanced techniques
such as EOR is estimated to be between US$35 and
US$80 a barrel, similar to the cost of production
from oil sands. The cost of producing oil from the
Arctic could reach US$100 a barrel because the large
cost associated with developing infrastructure in an
environmentally challenging area (IEA 2008).
The increase in oil prices over the past five years has
encouraged exploration activity in frontier regions
such as the Campos Basin off the coast of Brazil and

in deeper water in the Gulf of Mexico. The Brazilian
Tupi field, for example, one of the most significant
oil discoveries in the past 20 years, is 5 km below
the surface of the Atlantic Ocean and below a salt
layer up to 2 km thick. In September 2009, BP
announced the discovery of the Tiber oil field in the
Gulf of Mexico. The oil field is 10 700 m below
the ocean floor and in water that is around 1200m
deep, making it one of the deepest drilled in the
industry (BP 2009b). The continued development
and application of deep water drilling and field
development will eventually lead to lower production
costs and the expansion of frontier areas where
new oil fields can be developed in deeper water and
further below the seabed, but the process at present
is costly.
Synthetic oil production, such as shale oil, CTL and
GTL, has the highest production costs, estimated
by the IEA at up to US$110 per barrel. This makes
no allowance for any costs associated with the
abatement of greenhouse gas emissions that are
by-products of the process. At present there are very
few commercial CTL and GTL projects, reflecting
large capital and production costs and technically
challenging production processes.
The future expansion of GTL capacity will depend
on competing uses for gas such as for electricity
generation, transport or export by pipeline or as LNG.
One of the challenges for CTL is managing the high
CO2 output. Each barrel of oil produced from this
technology releases between 0.5 and 0.7 tonnes of
CO2, compared with around 0.2 tonnes of CO2 from
a barrel of oil from the GTL process (IEA 2008).
65
GTL plants are operating in Qatar, South Africa

and Malaysia and there has been output from an
experimental (500 bbls per day) plant in Japan. There
is one CTL plant in South Africa.
In comparison to GTL and CTL, production from oil
shale is the more uncertain, given its energy and
carbon intensity. There is some oil production from oil
shale in Brazil, China and Estonia. The introduction of
a price for carbon would further increase the cost of
shale oil extraction.
Recent high oil prices have encouraged investment
in technology to improve extraction of oil from oil
sands and research to commercialise oil production
from coal and gas. If the R&D is successful, it
should enable production of increased quantities
of oil from unconventional sources. However,
despite the recent R&D effort, production costs for
these unconventional sources have all increased,
associated with higher capital and operating costs.
Further information on the long term outlook for oil
prices is contained in Chapter 2.
Oil demand
The two factors expected to influence oil demand over
the next two decades are the continued decrease in
oil intensity in OECD economies and the increased oil
consumption in non-OECD economies associated with
strong economic growth.
In the OECD, oil intensity (the amount of oil
consumed per unit of GDP) has been decreasing
since the oil shocks of the 1970s (figure 3.31). One
of the drivers of this trend has been the move away
from oil-fired electricity generation capacity, to coal,
gas or nuclear power. The increase in prices during
2007 and the first half of 2008 is likely to reinforce
this trend and will encourage analogous responses
in other areas of demand such as the transport
sector. Improved fuel efficiency, increased uptake
of alternative transport fuels and development
of alternative transport modes are all possible
impacts. The continued decrease in oil intensity also
complements broader environmental and energy
security policy goals.
3.5
Oil consumption (barrels per day)

per real GDP (2000 US$)
66
3.0
2.5
2.0
1.5
OECD
1.0
Non-OECD
0.5
AERA 3.31
0
1972
1977
1982
1987
1992
1997
Year
Figure 3.31 Oil intensity of GDP

Source: ABARE estimates from IEA 2009b data
2002
2007
Non-OECD economies, including China and India, are

projected to grow strongly over the outlook period.
Historically, there has been a strong correlation
between economic growth and oil consumption,
driven by higher personal incomes and increased
demand for personal transport and vehicle
ownership. The IEA projects that, by 2030, non-OECD
economies will account for around 53 per cent of
world oil consumption, compared with 41 per cent in
2008 (IEA 2009c).
Resource characteristics
In Australia, the initial depositional environments
and subsequent maturation history after burial
that are required to produce and preserve crude
oil accumulations (Box 3.1) have occurred less
frequently than the geological conditions that have
resulted in natural gas accumulations. Australias
identified conventional petroleum resources are
dominated by widely distributed natural gas. In
contrast, the major known accumulations of crude
oil are restricted to the Gippsland Basin and five
oily sub-basins (Longley et al. 2002) along the
north-west margin. This distribution is controlled by
the occurrence of deep, narrow troughs containing
mature oil source rocks which were formed around
the continents margins as it broke apart from
Gondwana. The Gippsland Basin is a world class oil
province with a number of giant fields: it is exceptional
in the Australian context, having the greatest thickness
of young (Cenozoic) sediments. Most of Australias
crude oil has come from this one small basin being
sourced from an oil kitchen (the Central Deep) only
about 50 km wide (figure 3.32).
Similarly, the crude oil in the Exmouth, Barrow and
Dampier sub-basins of the Carnarvon Basin, and in the
Vulcan Sub-basin and the Laminaria High Flamingo
Syncline of the Bonaparte Basin is derived from narrow
Late Jurassic troughs filled with oil-prone source rocks.
Some crude oil accumulations have been preserved
in the older (Paleozoic) largely onshore basins but the
major discovered resources and the greatest potential
for future finds are offshore.
The condensate and LPG resources are also
predominantly located in offshore basins, especially in
giant gas fields on the North West Shelf. Gas liquids
are not present in the large coal seam gas (CSG)
resources identified in onshore eastern Australia.
Australian shale oil resources are variable in organic
richness and moisture content. Those in Cenozoic
basins of eastern Queensland are thick and relatively
shallow deposits with viable oil yields, and have a low
carbonate content which does have advantages in
processing, including less CO2 release.
Technology developments
The development of conventional oil resources in
the past has benefited from significant technological
C H A PTE R 3: OIL
Fault
Basin outline
100
Gas field
NT
VICTORIA
Lak
gto
Wellin
North
e
Northern Terrace
SALE
Barracouta
500
1000
2000
Fortescue/Halibut
Bream
147
tform
Snapper
Marlin
Central Deep
Foster
rn Pla
System
Fault
Rosedale
Darriman
NSW
VIC
TAS
System
Fault
SA
ORBOST
BAIRNSDALE
39
QLD
WA
Oil field
38
50 km
Bathymetry contour (metres)
Ba
Fau
Fa
ult
lt
Southern Platform
Kingfish
ss
Ca
nyo
300
System
Sys
tem
148
149
Gippsland
Rise
AERA 3.32
Field outline information is provided by GP Info, an Encom Petroleum Information Pty Ltd product.
Figure 3.32 Gippsland Basin showing oil and gas fields and structural elements
Source: Geoscience Australia, from data provided by GeoScience Victoria
change over a sustained period of time, leading to

increased access to reservoirs, increased recovery
of reserves, reduced costs of exploration and
production, and reduced technical and economic
risks to the development of oil projects. There are
similar technological advances and needs in
developing unconventional resources. Both are
discussed in more detail below.
Development of exploration technology

Exploration involves a number of geophysical and
drilling activities to determine the location, size, type
(oil or gas) and quality of a petroleum resource. Prior
to area selection, initial regional studies (figure 3.33)
may use non-seismic survey techniques (gravity,
magnetic and geochemical surveys, satellite imagery
and sea-bed sampling) to define sedimentary basins
and to determine if there are any indications of
natural hydrocarbons seepage. Recent technological
developments, such as accurate global positioning
systems, improved computing power, and algorithms
for reprocessing existing seismic data and advanced
visualisation techniques used to combine different
data sets (Wilkinson 2006), have enhanced the value
of this phase of the exploration process, especially in
offshore frontier basins. In Australia, with its largely
under-explored vast on- and offshore jurisdiction,
government has taken an active role in providing
this regional scale pre-competitive information to
stimulate exploration.
Hashimoto et al. (2008) demonstrate how a variety of

geophysical and other datasets can be integrated to
assess the structure and petroleum potential of the
remote frontier Capel and Faust basins offshore from
eastern Australia. Figure 3.33 is a 3D view across
the undrilled Capel and Faust basins showing seismic
lines integrated with gravity imagery. These datasets
have assisted in the identification of potentially
prospective thick sedimentary depocentres, bounding
faults and structural highs underlain by shallow
basement within this vast frontier area.
Once the prospective area is located, more detailed
seismic survey techniques are used to determine
subsurface geological structures. Advances in 3D
seismic imaging can now display the subsurface
structure in greater detail (Wilkinson 2006) and
amplitude analysis can reveal potential petroleumbearing reservoirs, contributing to recent high drilling
success rates in the Carnarvon Basin (Williamson
and Kroh 2007). Developments in exploration drilling
now allow prospective structures identified on
seismic to be tested in water depths beyond two
and half kilometres.
Development of production technology

For onshore fields, development proceeds in step
with the appraisal drilling. In offshore fields, however,
the optimal number and location of development
wells must be identified prior to proceeding with
the development.
67
Oil production requires the establishment of

production wells and facilities. At the initial stage of
production, the natural pressure of the sub-surface
oil reservoir forces oil to flow to the wellhead. This
primary recovery commonly accounts for 25 to 30
per cent of total oil in the reservoir (CEM 2004),
though some offshore Australian reservoirs have
recovery rates of 70 or 80 per cent supported by
a natural strong water drive, as in the case of the
Gippsland Basin. More commonly, advanced recovery
techniques are employed to extract additional oil from
the reservoir, including injecting water or gas into the
reservoir to maintain the reservoirs pressure. Pumps
can also be used to extract oil. These conventional
techniques can increase the additional amount of
recoverable oil by around 15 per cent.
AERA 3.33
NT
WA
QLD
Fault
SA
NSW
VIC
TAS
68
Figure 3.33 Integrated seismic and gravity data showing

the location of major faults, sedimentary depocentres
(gravity lows denoted in blue tones) and areas of shallow
basement (gravity highs denoted in red tones) from the
remote Capel and Faust basins
Enhanced oil recovery (EOR) is a more advanced

technique that has been developed to extract
additional oil from the reservoir. This technique
alters the oil properties, making it flow more easily,
by injecting various fluids and gases, such as
complex polymers, CO2 and nitrogen, to enable more
oil to be produced. This technique could increase
oil recovery by an additional 40 per cent, but is
costly to implement (IEA 2007). Currently, there
are 11 countries, including Australia, participating
in the IEAs EOR Implementing Agreement, which
encourages international collaboration on the
development of new oil recovery technologies,
including less costly EOR technology. While these
techniques have been employed in the past, currently
there is no EOR in Australia.
Bottom-supported
Submersible
Floating
Jack-up
Semi-submersible
Drillship
Thrusters
~50 m
~100 m
Anchor chain
Riser
Approximate maximum water depth shown in metres (m)

~600 m
Figure 3.34 Types of offshore drilling vessels

Source: Wilkinson 2006
~1500 m
AERA 3.34
C H A PTE R 3: OIL
Access to deep water fields has become

technologically feasible with the recent development
of floating facilities and tension leg platforms
(Wilkinson 2006). The maximum water depth at which
oil projects can be developed increased from 6 m in
1947 to 312 m in 1978 and 1027 m in 1995 (Hogan
et al. 1996). More recently, maximum water depths
for petroleum production have increased further to
beyond 2300 m with the Cheyenne field (Anadarko
2007) and the Perdido development (Shell 2009) in
the United States Gulf of Mexico.
There have also been technological developments
in shale oil production particularly in the United
States where several companies are testing in situ
technologies to extract shale oil at more than 300m
depth (USDOE 2007). In comparison Australias
oil shales are relatively shallow deposits and the
focus has been on surface extraction technologies
(Geoscience Australia 2009b).
Oil supply economics

The process of supplying oil is complex, involving
steps such as exploration, development, production,
processing/refining and transport (section 3.3.2).
Upstream oil costs (exploration, project development
and production) are a major component of total costs
within the oil and refined products industry.
Over the past five years, there has been a
considerable increase in exploration, project
development and production costs. This increase
in costs largely relates to increased competition for
inputs (drilling rigs, production equipment, labour)
as oil fields were developed in response to higher
prices. In Australia, costs have increased as a
result of global demand for inputs, but also because
of the nature of resources. Australias remaining
undeveloped oil resources are generally located in
fields that are further offshore, in deeper water and
further below the ocean floor. These factors increase
the technical and economic challenges associated
with exploration, development and production of
Australias oil resources.
Exploration
Oil exploration is fundamentally concerned with the
management of risks (Jones 1988). The expected
location, size and quality of oil reservoirs are crucial
in decision making because large oil deposits
4.0
a) Exploration expenditure and oil prices
120
3.5
100
80
2.5
2.0
60
1.5
A$/bbl
$B (2008)
3.0
40
1.0
20
0.5
0
0
1980
1985
1990
1995
2000
2005 2008
Year
300
b) Number of exploration wells
250
200
Number
Reflecting the large number of oil resources located

offshore, most R&D has been directed toward offshore
technologies. There are several possible development
options for offshore oil projects, based on bottomsupported and floating production facilities. The
development of these options is dependent on several
factors including resource type, reservoir size, water
depth and distance from shore. Bottom-supported
platform developments are suitable for relatively
shallow water depth (figure 3.34).
150
100
50
AERA 3.35
0
1980
1985
1990
1995
2000
2005
2008
Year
Total expenditure
($B 2008)
Onshore wells
Offshore wells
Oil prices (A$/bbl)
Figure 3.35 Exploration for Australias petroleum

resources
Source: Geoscience Australia, Australian Bureau of Statistics 2009
generally mean large payoffs. When an exploration

well is drilled, there is a risk that no oil will be found
and therefore no revenue generated. Even if oil is
found, there is still a risk that it will not be available
in commercially exploitable quantities or that the
costs of development and production are sufficiently
high to render the new discoveries non-viable.
Because of this risk, a large exploration expenditure
is generally required, and only a small portion of
this expenditure will actually lead to the discovery of
resources that are economically viable to extract.
Figure 3.35 provides key indicators of exploration
expenditure and activity, in terms of number of
exploration wells drilled, for Australias petroleum
resources, both oil and gas. Between 2002 and
2007 there was a significant increase in the
number of exploration wells drilled. Higher oil prices
encouraged companies to explore because of
the increased potential returns associated with a
discovery. In 2008, the number of exploration wells
69
decreased significantly even though the level of

exploration expenditure continued to rise. The number
of onshore exploration wells drilled declined steeply
from more than 150 in 2006 and 2007 to 80 wells
in 2008 whereas the number of offshore exploration
wells increased slightly, reaching an all time high of
74 wells in 2008. The cost associated with drilling
each well increased dramatically in the first half of
2008 associated with a worldwide shortage of drilling
equipment and labour. The oil price fell dramatically
in the second half of 2008 but recovered in 2009
to levels well below the highs reached the previous
year (Chapter 2). The fall in oil price may have
discouraged discretionary onshore exploration as
some companies sought to reduce expenditure as
global capital markets dried up. Oil price fluctuations
tend to have a less immediate impact on offshore
exploration. Permit drilling commitments and rig
contracts delay response to oil price signals and
many offshore exploration wells target gas rather
than oil.
Since 1980, more exploration wells have been drilled
onshore in Australia than offshore. This reflects
the relatively lower cost of onshore oil exploration.
In 2005, the average cost of surveying and drilling
an onshore exploration well in Australia was around
A$3 million, while that for offshore was around A$12

million (ABARE and Geoscience Australia). Hence,
smaller companies are generally involved in onshore
exploration, while offshore exploration is mostly
undertaken by larger companies.
Since 2005 exploration expenditure has exceeded
a billion dollars annually and steeply risen to an
expenditure totalling $3.36 billion in 2008 (Australian
Bureau of Statistics 2009), mirroring the rise in oil
prices and exceeding the previous peak in exploration
in the early 1980s. However, in an environment of
increased drilling costs this large rise in exploration
investment has not translated into more wells drilled.
Development
Figure 3.36 shows the flow of activities from
exploration to production of an oil field. During
exploration and appraisal, the oil field is discovered
and the reserves estimated for potential
development. The development of an oil field includes
the planning and construction processes. Planning
involves a preliminary design (or feasibility study)
followed by a front-end engineering and design
(FEED) study. The FEED provides definitive costs and
technical details to enable a final investment decision
(FID). After a FID has been made, construction
FID
a)
70
Exploration
Appraisal
Development
Construction
Production
FEED
b) 1999
c) 2005
Other
3%
Other
20%
Exploration
21%
Development and
production
59%
Exploration
17%
Development and
production
80%
AERA 3.36
Figure 3.36 Components of upstream petroleum expenditure, a) steps in development process, b) expenditure by
activity in 1999, c) expenditure by activity in 2005
Note: FEED front-end engineering and design, FID final investment decision
C H A PTE R 3: OIL
can commence. The average time from discovery

to production for Australian new field crude oil
discoveries is about five years (Powell 2004).
projects, such as Laminaria Phase 2 (table 3.12),

can achieve additions to capacity at lower cost than
entire new developments.
The development and production of oil is technically

complex which results in large capital expenditure. In
Australia, the majority of oil production occurs below
the seabed, often in water that is hundreds of metres
deep. This requires specialised equipment that can
withstand the pressure and temperatures of deep
water and deep within the sedimentary section.
Production
Project development costs have increased

significantly over the past six years, both in
Australia (figure 3.37) and globally. This increase
in expenditure is twofold. Firstly, the increase in
oil prices has encouraged the development of new
capacity which has placed upward pressure on prices
for inputs such as labour and equipment globally.
Secondly, newly developed oil fields in Australia tend
to be in deeper water and further offshore (table
3.12), which increases the technical complexity of
the project and hence cost. Extensions to existing
a) Investment and production expenditure and oil price
120
100
80
60
40
20
A$/bbl (2008)
$B (2008)
0
1980
1985
1990
1995
2000
2005
Year
180
b) Number of development wells
A typical oil production profile for various types of

oilfields is shown in figure 3.38, by plotting annual
and cumulative production from the sample of
oilfields with respect to their reserves. In general,
the build-up to peak production is longer for a larger
oilfield, whereas smaller fields reach their peak
sooner and decline more rapidly than large fields.
Figure 3.38 shows that, for an average onshore
oilfield, around 20 per cent of reserves from a
small field are produced during the build-up phase,
compared with just over 10 per cent for a larger field.
For some large fields, such as the Zakum field in the
United Arab Emirates where production started in
the late 1960s, the build-up period took more than
several decades before it reached peak production
in 2002. In contrast, the smaller Hassi Berkine Sud
field in Algeria where production started in 1998 has
already passed its peak production (IEA 2008).
10%
Annual production as share of

initial 2P reserves
150
120
Number
Each oil field has a unique production profile,

depending on the natural characteristics of the
reservoirs including locations, depth and size of
the reservoirs and the nature of production from an
oilfield including commercial and policy decisions.
However, a typical production profile of an oilfield
looks similar to a bell-shaped curve that skews to
the left and can be distinguished into three phases.
These include a build-up phase where production
rises as new wells are developed, a plateau phase
where production from new wells offsets a natural
decline from old wells, and a decline phase where
resource from an oilfield begins to deplete.
90
60
8%
6%
4%
2%
30
0%
AERA 3.37
0
1980
1985
1990
1995
2000
2005
2008
0%
2%
4%
6%
Year
Onshore <500 mmbbl
Total
Onshore
Offshore
Oil prices
8%
Cumulative production as share of initial 2P reserves
Offshore <500 mmbbl

Onshore 500 - 1500
mmbbl
10%
Offshore 500 1500 mmbbl

All >1500 mmbbl
Deepwater
AERA 3.38
Figure 3.37 Development and production of Australias

petroleum resources
Figure 3.38 Typical oil production profiles
Source: IEA 2008
71
Table 3.12 Australian oil projects, capital costs, unit costs

Project
State
Year
completed
Capital cost
A$m
Additional
capacity
(kbpd)
A$/bpd
Water depth
(m)
Roller/Skate
WA
1994
170
10
Elang/Kakatua
WA
1998
42
40
1050
Stag
WA
1998
180
50
3600
49
Cossack/Wanaea
WA
1999
190
25
7600
80
Laminaria/Corallina
WA
1999
1370
155
8839
Buffalo
WA
2000
145
40
3625
Lambert/Hermes
WA
2000
120
16
7500
126
Legendre
WA
2001
110
40
2750
52
Laminaria Phase 2
WA
2002
130
65
2000
Mutineer-Exeter
WA
2005
440
90
4889
168
Basker and Manta
Vic
2005
260
20
13 000
Enfield
WA
2006
1480
74
20 000
544
Cliff Head
WA
2006
285
12.5
22 800
Puffin
NT
2007
100
25
4000
Vincent (stage 1)
WA
2008
1000
100
10 000
Stybarrow
WA
2008
874
80
10 925
800
Woollybutt
WA
2008
143
20 429
100
Note: kbpd thousands of barrels per day, $A/bpd cost in Australian dollars per additional barrel per day production capacity
Source: ABARE
72
In addition, oilfields that are located offshore

generally reach peak production in a shorter time
than reserves that are located onshore. For oilfields
that contain reserves of less than 500 mmbbl,
around 25 per cent of reserves from an offshore oil
field are produced by the time production reaches
its peak (figure 3.38). This compares with cumulative
production of around 20 per cent for fields of the
same size that are located onshore. The production
profile of offshore fields reflect their higher
development costs relative to onshore fields,
which generally trigger the project developer to
recover oil more quickly in order to keep the
cashflows for further development. Deeper offshore
oil fields tend to reach peak production early.
In Australia, total conventional oil production
(including crude oil, condensate and LPG) is
increasingly from offshore oilfields with deeper oil
accumulations (table 3.12) and fields that contain
smaller reserves compared with those developed in
the past. Given the typical production profile of these
types of reserves, increased exploration activity is
required and more oil wells need to be drilled if the
current production level is to be maintained.
Infrastructure issues
Australian oil infrastructure is generally well
developed, from upstream oil developments to
processing at refineries. There have not been any
recent significant increases in Australias oil refinery
capacity, however substantial capital is spent on
existing refineries to ensure continued and reliable
production of clean fuels. Australias liquid fuel

supply has also been enhanced by imports from
refineries in the Asia Pacific region. The increased
interdependency between refineries (with the move to
cleaner fuels), and little spare refining capacity has
the potential for a refinery disruption to impact on
supply (ACILTasman 2008).
Given the likely increased levels of imports of refined
product, investment in import/export infrastructure,
including the possibility of greater storage capacity
to mitigate supply disruption will be of growing
importance. Resolution of policy issues impacting
on markets, including national and international
decisions on emission reductions targets, and
methods to achieve them, such as levels of support
for alternative transport fuels, will help enhance
investment decision-making.
Environmental considerations
The Australian State/Territory governments require
petroleum companies to conduct their activities in a
manner that meets a high standard of environmental
protection. This applies to the exploration,
development, production, transport and use of
Australias oil and other hydrocarbon resources.
Onshore and within three nautical miles of the
coastline the relevant state/ territory government
has the main environmental management authority
although the Australian Government has some
responsibilities regarding environmental protection,
especially under the Environmental Protection and
Biodiversity Conservation (EPBC) Act 1999.
C H A PTE R 3: OIL
120
130
140
150
750 km
DARWIN
Gre
10
ier
Barr
at
Re
e
ar
in
Park
20
BRISBANE
PERTH
30
SYDNEY
ADELAIDE
MELBOURNE
HOBART
40
Marine park/reserve
73
Australian Exclusive Economic Zone

AERA 3.39
Figure 3.39 Current marine protected areas of Australia

Source: DEWHA 2008
In the offshore areas beyond coastal waters the

Australian Government has jurisdiction for the
regulation of petroleum activities. The objectivebased Petroleum (Submerged Lands) (Management
Environment) Regulations 1999 provide companies
with the flexibility to meet environmental
protection requirements. Petroleum exploration
and development is prohibited in some marine
protected areas offshore (such as the Great Barrier
Reef Marine Park) and tightly controlled in others
where multiple marine uses have been sanctioned
(figure 3.39). Environmental Impact Assessments
(EIA) required as pre-conditions to infrastructure
development applications especially of larger
projects may require environmental monitoring over
a period of time as a condition to the approval before
the development can commence. In some cases
regional-scale pre-competitive baseline environmental
information is available from government in the
form of regional syntheses containing contextual
information that already characterises the
environmental conditions in the area of the proposed
development. In the offshore area typical data sets

that are required for marine EIA in EPBC Act referrals
include: bathymetry, substrate type, seabed stability,
ocean currents and processes, benthic habitats and
biodiversity patterns.
Oil spills are a potential environmental risk that
requires careful management during exploration
and production phases. Safeguards are in place
through the Australian Marine Safety Authority (AMSA
2009). There are also well established processes for
mitigating other environmental concerns including the
impact of seismic surveying on cetaceans.
The mining, processing and refining of shale oil involves
a somewhat different range of environmental issues,
including disposal of spent shale, impacts on air and
water quality, and greenhouse gas emissions. Heating
oil shale, whether above or below ground, requires
energy inputs and entails emissions. The composition
of Australian oil shales is low in carbonates, making
carbonate decomposition to CO2 less of a problem in
Australia than it is in some other deposits.
For conventional liquid petroleum resources

additions will come from several potential sources:
Field growth extensions to identified fields and
revisions to recovery factor estimates;
Enhanced oil recovery (EOR) from existing fields;
Discovery of new commercial fields in established
hydrocarbon basins; and
Discovery of new fields in frontier basins that
become commercial by 2030.
Field growth
Growth in reserves in existing fields can add
significantly to total reserves, for example by 40
per cent for sandstone reservoirs in the North Sea
(Klett and Gautier 2003). These increases are
based on new information gathered about the extent
and nature of the initial oil pool intersected by the
discovery well during the development and production
phases. Factors which can contribute to field growth
were listed by Powell (2004) as including:
Increases in the known volume of discovered
pools from drilling and geophysical data;
New pool discoveries often by development wells;
Improved development technology allowing
a greater proportion of the oil-in-place to be
produced; and
74
Revised assessment of reservoir and fluid

properties leading to higher recovery factors
than those originally calculated, with real world
reservoir performance data substituting for initial
generic assumptions.
Geoscience Australia estimated that there was scope
for an additional 5880 PJ (1000 mmbbl) of liquid
petroleum resource (crude oil and condensate) from
field growth in identified fields. Some of this potential
may have already been realised as these estimates
were made several years ago (Geoscience Australia
2004, 2005).
Enhanced Oil Recovery

Geoscience Australia estimated in 2005 that
there was scope for about an additional 6468 PJ
(1100mmbbs) of crude oil from EOR. However,
currently there is no EOR production in Australia,
and none in offshore fields anywhere in the world.
Application of EOR depends on the availability
(supply) and cost of miscible gases such as CO2 or
nitrogen (Wright et al. 1990), oil price, technology
advances and the geology of the reservoir. Because
of initial recoveries of up to 60 per cent or more of
the oil in place, it is considered unlikely that EOR
from Australias major oil reserves in offshore basins
will contribute significantly to liquid fuel supply in
the outlook period. Field growth through improved
reservoir performance also reduces the target
volume of oil in place for EOR. There may be some

minor EOR production from onshore basins where
enhanced recovery is coupled with CO2 storage as in
the proposed Moomba Carbon Storage project in the
Cooper Basin (Santos 2009).
Discovery of new fields in established

hydrocarbon basins
Successful exploration in hydrocarbon producing
basins is a major potential contributor to Australias
conventional oil resources. The volume of new
reserves added is dependent on the number of
exploration wells drilled, the size of the prospects
tested and the success rate for oil discoveries that
can be commercially developed. Perceptions of
prospectivity and the economic, regulatory and fiscal
environment influence the number of exploration
wells drilled (Bradshaw et al. 1999); while geological
factors, as outlined in box 3.1, determine the field
size distribution and the chance for oil. As a basin
is explored the size of prospects tested generally
decreases, as the largest structures are usually
those first drilled. However, application of new
geological concepts and new technology can reverse
this trend.
The number of exploration wells drilled in Australia
has varied through time but prior to the recent peak
there has been a long term decline in onshore drilling
(figure 3.35). The historical success rates are around
20 per cent for petroleum exploration in Australian
basins, but lower when crude oil only is considered.
A number of assessments of the undiscovered oil
potential of Australias major hydrocarbon producing
basins have been undertaken using different
methods, including those used by the USGS and
the more conservative approach employed by
Geoscience Australia (box 3.3). As noted by Powell
(2001), undiscovered resource assessments
have multiple inbuilt uncertainties and only have
validity in the context of the method used and the
purpose for which they were undertaken. Estimates
in established hydrocarbon basins can be based
on the known discovery history trends and field
100
Cumulative probability (%)
3.4.2 Outlook for oil resources
80
60
Mean 5032
40
20
AERA 3.40
0
0
5000
10 000
15 000
Undiscovered oil (million barrels)
Figure 3.40 Australias undiscovered oil resources

Source: USGS 2000
20 000
C H A PTE R 3: OIL
Box 3.3 Resource Assessment Methodologies

USGS World Petroleum Assessment (USGS 2000)
estimation of the long-term geological potential
of the total petroleum system in a basin. It is limited
to conventional potential resources that could be
added to reserves in a 30 year time frame and
based on the demonstrated existence of generative
(mature) source rocks and geological models of
petroleum occurrence. The geological opinion of a
panel of experts is used to establish probabilities
for the chance of occurrence, number and size of
fields, and proportions of oil, gas and condensate.
Probability distributions are then computed for
undiscovered resources.
forecasts for a limited time horizon (typically 5 to

15 years) and an emphasis on discovery modelling
using known exploration trends (Powell 2001).
The assessment unit is a single migration fairway
comprising a system of traps that is contained with
a sequence of source, reservoir, and cap rocks and
is separated from adjacent systems by geological
barriers to tertiary migration of hydrocarbons. The
approach uses log linear models of drilling or
discovery to estimate the size of potential future
discoveries, and takes into account existence risk,
exploration success rate, the proportion of oil and
gas, and the smallest size to be included as a
resource (Powell 2001).
Geoscience Australia assessments discovery
Table 3.13 Estimates of undiscovered potential in Australian basins

Crude Oil
Basin
95%
Condensate
Mean
5%
95%
Mean
5%
PJ
mmbbl
PJ
mmbbl
PJ
mmbbl
PJ
mmbbl
PJ
mmbbl
PJ
mmbbl
Bonaparte
2252
383
7562
1286
15 317
2605
1564
266
6345
1079
14 124
2402
Browse
1347
229
6203
1055
15 323
2606
1241
211
5492
934
12 965
2205
Carnarvon
5069
862
14 000
2381
23 826
4052
7138
1214
21 650
3682
38 408
6532
Gippsland
606
103
1823
310
3428
583
423
72
1993
339
4398
748
Total
9273
1577
29 588
5032
57 894
9846
10 366
1762
35 480
6035
69 896 11 887
Note: 95%, Mean and 5% denote the probability of the resources exceeding the stated value
Source: USGS 2000
size distributions, and a substantial geological

dataset which has sampled the natural variability
in the basin. They are also dynamic and change as
knowledge improves and uncertainties are resolved,
assessments of frontier basins are more uncertain
as there is no local history of exploration outcomes
on which to base the estimates. The results of
undiscovered resource assessments are best
considered as probability distributions rather than as
a raw number. Figure 3.40 is a cumulative probability
plot of Australias undiscovered oil resources in the
major offshore producing basins as generated by
the USGS (2000). Each point of the curve shows the
probability of discovering at least the amount of oil
shown on the horizontal axis.
Geoscience Australia estimates that risked mean
undiscovered resources in currently producing
basins are around 9996 PJ (1700 mmbbl) of crude
oil and 4116 PJ (700 mmbbl) of condensate. The
USGS assessment at the 50 per cent probability
(P50) of 29 588 PJ (5032 mmbbl) of crude oil and
35480PJ (6035 mmbbl) of condensate (table 3.13)
is substantially more optimistic than the conservative
shorter-time horizon Geoscience Australia
assessment. The USGS assessment represents
an indicative estimate of the ultimate resource
potential for these basins (Powell 2001) whereas the
Geoscience Australia estimate may better reflect the

potential oil resources discovered in producing basins
by 2030 given current exploration drilling rates. The
Carnarvon Basin is considered the most prospective
of the basins assessed to contain large undiscovered
resources of crude oil and condensate (table 3.13).
The USGS assessment focussed only on the most
prospective of Australias established hydrocarbon
basins and did not include the Cooper/Eromanga,
Bowen/Surat, Perth, Otway and Bass basins, all of
which have had oil discoveries in the past decade,
although of only modest size (10 mmbbl, 59 PJ or
considerably less).
There is still crude oil to be found in the established
basins, especially in the less explored zones,
such as the deep water extensions of the proven
areas, but giant oil field discoveries are considered
unlikely in the context of current play concepts and
technology. The analysis of Powell (2004) showed
that most established basins demonstrated a very
strong creaming effect, implying that the large oil
fields had already been found in these basins. The
exceptions were the Carnarvon and the Perth basins.
In the Carnarvon Basin the successful exploration
of the deep water Exmouth Sub-basin has provided
the largest additions to crude oil reserves (around
75
500 mmbbls, 2940 PJ), but in the Perth Basin the

early promise of the offshore the Cliff Head discovery
has not been followed up with more substantial
finds in the surrounding area. However, most of the
deepwater offshore Perth Basin remains untested
and it is the focus of new pre-competitive data
acquisition by Geoscience Australia.
within months if they are close to infrastructure (e.g.

inshore fields in the Carnarvon Basin). Development
of gas liquid (condensate and LPG) accumulations
which now account for most of Australias oil
resources, on the other hand, can be delayed,
sometimes for decades. Powells 2004 analysis
shows that most gas fields take 11 to 15 years from
discovery to development. A high liquids content can
accelerate development, although Ichthys with over
500 mmbbls of condensate and Australias largest
remaining oil field was discovered by the Brewster
well in 1980 and is only now being assessed for
development. Hence the oil resource outlook to 2030
is in part dependent on the rate of development of
liquids-rich gas fields. Factors that may influence
development timetables include market demand,
environmental approvals, the challenge of any
associated CO2 and technological developments such
as floating LNG facilities, discussed in Chapter 4.
In comparison, the North West Shelf is more fully

explored and Longley et al. (2002) reviewed the
chances of finding a new oil province, similar in size
and significance to the Exmouth Sub-basin, on the
shelf and concluded that it was unlikely. Since this
prediction a number of the less explored sub-basins
have been drilled, including deepwater tests at
Maginnis-1 in the Seringapatam Sub-basin, Browse
Basin; Huntsman-1 in the Rowley Sub-basin, offshore
Canning Basin; Wigmore-1 in the Beagle sub-basin
and Herdsman-1 in the southern Exmouth Sub-basin,
Carnarvon Basin (Walker 2007). However, none of
these were successful in finding a new oil trend and
the pattern of known oil occurrence on the North
West Shelf remains confined within the proven parts
of the Bonaparte, Browse and Carnarvon basins.
Successful exploration has proceeded in these
basins but with the focus on gas, and giant gas fields
continue to be found.
76
Discovery of new fields in non-producing and

frontier basins
Frontier basins have a low level of exploration activity
compared to established hydrocarbon basins. There
are rank frontiers that have had no exploration
drilling (for example, the Bremer Sub-basin) and other
frontier areas where there has been only handful of
wells drilled and major trends remain untested (for
example, the Ceduna Sub-basin where only one well
has been drilled in the main depocentre with others
drilled on the margin, figure 3.41). In Australias
Crude oil discoveries tend to be developed relatively

quickly with most coming into production within five
years of discovery (Powell 2004) and sometimes
120
140
160
Christmas
Island
10
Lord Howe Rise
Lord Howe Island

Ceduna
Sub-basin
Norfolk
Island
30
Bremer Sub-basin
Outer Limit of the Exclusive Economic Zone of Australia as defined by UNCLOS & certain treaties (not all in force)
NEW ZEALAND
Outer Limit of the Continental Shelf of Australia as defined by UNCLOS & certain treaties (not all in force)
Basin outline
1000 km
Exploration and development wells

AERA 3.41
Figure 3.41 Sedimentary basins and petroleum exploration wells

09-3969-2
C H A PTE R 3: OIL
poorly explored frontier basins many of the largest

structures remain untested, and vast areas of
sedimentary basins especially off the south-western,
southern and eastern margins, have not been drilled.
These offshore areas offer the greatest potential for
major new oil discoveries. The deepwater Ceduna
Sub-basin in the Great Australian Bight is considered
to represent the highest probability for finding a
new oil province (Totterdell et al. 2008) given the
presence of an oil-prone source rock within a thick
Cretaceous delta sequence.
Geoscience Australia is currently undertaking a
program of pre-competitive data acquisition and
interpretation to assess the petroleum potential of
selected frontier basins. New seismic, potential field
data and seabed samples have been collected from
a number of offshore basins (Bight, Mentelle, Perth,
Offshore Canning, Arafura, Otway and Sorell) to better
understand the geological history and hydrocarbon
resource potential of these areas. These studies
have underpinned subsequent acreage release with
uptake of exploration acreage in previously neglected
areas (Bremer Sub-basin, Bight Basin; Vlaming Subbasin, Perth Basin; Offshore Canning Basin and the
Arafura Basin). Industry work in these new exploration
permits is at an early stage; 2D and 3D seismic data
have been acquired but exploration wells are yet to
be drilled.
Geoscience Australia is also completing precompetitive studies of two of the four basins in the
remote deepwater frontier of the Lord Howe Rise and
early results have identified a number of depocentres
that have sedimentary thickness (up to 7 km) and
volume (100 km long and 30 km wide) sufficient to
have potentially generated significant hydrocarbons if
source rocks are present at depth (figure 3.31). While
these structural results from new seismic acquisition
are encouraging, no petroleum source rocks are
known because the area has not been drilled for
hydrocarbons. Pre-competitive data acquisition
programs in the onshore frontier Amadeus, Georgina,
Darling and Canning basins are being undertaken
by Geoscience Australia in cooperation with relevant
State Geological Surveys. The current programs are
limited compared with the large size of these basins:
both the Amadeus and Canning basins are proven
oil producers and oil source rocks known from the
Georgina Basin.
The size, number and geological diversity of
Australias frontier basins is consistent with major
undiscovered petroleum resources being present.
The petroleum resources likely to be discovered
in the years to 2030 depend on the amount of
exploration activity, the success rate, and the size
of prospects. Current frontier exploration rates are
low, averaging in the past decade less than 2 wells
per year in the offshore and around 10 per year
onshore (APPEA 2009) and are liable to remain so
without the stimulus supplied by access to regional

pre-competitive data. Success rates in frontier basins
can be as low as 10 per cent but can be improved
with new information and new technologies and, as
discussed above, prospect sizes can be large as the
largest structures are yet to be drilled. Current low
frontier drilling rates and low success rates make
it unlikely that a frontier oil discovery will be made
in any particular year. The only new oil province
discovered last decade was the Abrolhos Sub-basin
in the offshore Perth Basin, where the Cliff Head
field was found in 2001 as an offshore example
of a proven trend onshore. The offshore Exmouth
Sub-basin, which has materially added to Australias
oil production, was already established as a proven
hydrocarbon province with oil discoveries in the
1980s and 1990s.
A number of estimates of undiscovered hydrocarbon
potential derived from a variety of methods are
available for individual frontier basins and for
Australia as a whole (Bradshaw et al. 1998; Longley
et al. 2001). The publicly available assessments
have not integrated the results from the current
rounds of pre-competitive data acquisition. Even in
deepwater frontier basins, oil discoveries can be
expected to be developed within a few years using
FPSOs, if they are of commercial size.
Outlook for unconventional oils

Oil shale contains a large unconventional oil
resource for Australia. However there is currently
no production. Some of the challenges for the oil
shale industry include technical issues associated
with achieving large scale commercial production in
the face of uncertainty and volatility of future crude
oil prices. There are also environmental challenges,
including reducing CO2 emissions and water usage,
and issues associated with disposal of spent shale.
These challenges need to be overcome and oil prices
remain high for shale oil to contribute significantly to
resources in the outlook period.
Other unconventional sources of liquid fuels
include GTL and CTL technologies. While Australia
has abundant gas and coal resources, it is not
anticipated that these technologies will significantly
add to liquid fuel supplies in the outlook period.
Biofuels make a small contribution to current
oil supply in Australia and even with expanded
production are not expected to impact significantly
on Australian oil production until second generation
biofuels become available. Biofuels are discussed in
more detail in Chapter 12.
Total resource outlook

Figure 3.42 plots Australias potential total oil
resources, including known and undiscovered. The
following section details the potential demands on
these resources over the next twenty years.
77
250
?
Undiscovered in frontier basins
Undiscovered condensate in proven basins
Oil resorces (1000s PJ)
200
Undiscovered crude oil in proven basins
Oil shale inferred resources
150
100
Oil shale contingent resources
50
Consumption
in outlook
period
~56 000 PJ
EOR
Field growth
LPG resorces (EDR + SDR)
Condensate resources (EDR + SDR)
Crude oil resources (EDR + SDR)
AERA 3.42
Figure 3.42 Total oil resources (identified and potential) and estimated cumulative consumption
78
There is no currently publicly available resource

assessment of Australias undiscovered oil resources
that adequately reflects the new knowledge
gained in recent years during the active programs
of government pre-competitive data acquisition
and increased company exploration during the
recent resource boom. The knowledge base for
unconventional oil is at a low level.
3.4.3 Outlook for oil market

Without a major discovery, Australian oil production
is expected to continue to decline over the next
twenty years. In contrast, domestic oil consumption
is projected to increase moderately over the same
period, increasing the reliance on imports. ABAREs
latest long term projections for Australian energy
production, consumption and trade include the
impacts of the Renewable Energy Target (RET),
a 5 per cent emissions reduction target and other
existing government policies (ABARE 2010). These
results are discussed in more detail below.
Production
In the next few years, the production of oil in Australia
is expected to rise as developments now under
construction or in the advanced stages of planning
are completed. However, beyond the medium
term as far as 202930, combined crude oil and
condensate production are expected to fall as older
oil fields mature and slowly deplete. As with current
production, the majority of future production is likely
to be sourced from offshore basins in north-western
Australia. Combined crude oil, condensate and LPG
production is projected to fall gradually by 2.0 per
cent per year to 668 PJ by 202930.
More detailed production forecasts by Geoscience
Australia show that condensate is expected to
outstrip crude oil production by about 2015 and new
discoveries within the established basins could add
to production in the later half of the outlook period
(figure 3.43). Major new oil discoveries could reverse
this trend, just as the discovery and development of
new oil fields in the Carnarvon and Bonaparte basins
replaced the declining production from the Gippsland
Table 3.14 Outlook for Australias oil market to 202930

unit
202930
Average annual
growth,
200708 to 202930
%
Production of crude oil, condensate and LPG
PJ
668
-2.0
Consumption of crude oil, condensate and LPG
PJ
2443
1.8
Consumption of crude oil, condensate, LPG and oil products
PJ
2787
1.3
36
Net imports of crude oil and LPG
PJ
1775
5.0
Net imports of crude oil, LPG and petroleum products
PJ
2119
3.3
Source: ABARE 2010
C H A PTE R 3: OIL
2500
2000
PJ
1500
1000
500
0
2010
2015
2020
2025
2030
Year
Crude oil
Condensate
Undiscovered crude oil and condensate

AERA 3.43
Figure 3.43 Australian oil production outlook from proven hydrocarbon basins
Note: the production forecast is based on data from an industry survey of producing fields and Geoscience Australias assessment of
undiscovered resources in proven basins
3000
40
2400
32
1800
24
1200
16
600
79
PJ
Basin in the late 1980s (Powell 2001). Frontier

basins, such as the deep water Ceduna Sub-basin
in the Great Australian Bight, are seen as offering
the best chance for finding a major new oil province;
increased frontier drilling rates would improve the
likelihood of this outcome in the outlook period.
Consumption
Australias primary oil consumption is projected to
grow faster than production. Total consumption of oil
and oil products is projected to rise by 1.3 per cent
per year to reach 2787 PJ in 202930, with a share
in total primary energy consumption of 36 per cent in
202930 (figure 3.44, table 3.14).
In the short term, the global financial crisis and
its adverse impact on economic growth is a major
driver of the below-trend growth in consumption.
The introduction of significant policy measures,
namely the RET and a proposed emissions reduction
target, are expected to lead to an increase in
energy prices, and an associated dampening effect
on demand. Partly offsetting this trend, economic
growth in Australia is assumed to return to its long
term potential as world economic performance
improves. The decline in the growth rate for oil
consumption in the final decade of the outlook
period reflects primarily increasing carbon prices
under the emission reduction target and lower
economic growth assumptions.
The transport sector is expected to continue to
rely heavily on oil over the next twenty years.
0
1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 200700
01 02 03 04 05 06 07 08
202930
Year
Oil consumption (PJ)
Share of total
energy (%)
AERA 3.44
Figure 3.44 Australias outlook for oil consumption

Source: ABARE 2009b; ABARE 2010
Consumption of oil and petroleum products in the

transport sector is expected to grow steadily over the
projection period at an average rate of 1.2 per cent
per year driven largely by economic growth.
Trade
Continued growth in domestic oil demand and
declining domestic oil production are expected to
result in an increase in Australias oil imports over
the next twenty years (figure 3.45).
Exacerbating this gap between supply and demand
is the fact that a significant proportion of the growth
in domestic production of crude oil, condensate

and naturally occurring LPG will be concentrated in
the Carnarvon and Browse basins, in north western
Australia. As a result, it is reasonable to assume that
this supply of crude oil, condensate and naturally
occurring LPG will largely be exported to Asia for
processing, as opposed to supplied to the domestic
market. As a result, the ability of domestic production
to meet domestic demand is likely to be lower than
implied by the simple comparison of production and
consumption.
Reflecting this, Australias net trade position for liquid

fuels is expected to worsen over the outlook period,
with net imports increasing by 3.3 per cent per year
over the period to 202930.
3000
2000
PJ
Major project developments
1000
0
2007-08
2017-18
2027-28
Year
Net imports
Consumption
Production
AERA 3.45
80
The demand for petroleum product imports is

not only determined by domestic oil production
and end-use consumption of petroleum products,
but also by domestic petroleum refining capacity.
Australias refining capacity is not expected to expand
significantly given increasing competitive pressures
from larger refineries in south-east Asia in particular.
For a given domestic production and consumption
outlook, petroleum refining capacity constraints may
result in lower crude oil imports and, simultaneously,
higher imports of refined products.
Figure 3.45 Australias oil supplydemand balance

outlook
Source: ABARE 2010
However, new oil fields continue to be brought on

stream and at the end of October 2009, there were
three offshore oil projects under construction (table
3.15). Two projects are located in the Carnarvon
Basin and one project in the Bonaparte Basin in
north-western Australia. These three projects have
a combined peak oil production capacity of around
170000 barrels a day at an estimated capital cost
of around $3.5 billion.
There are also three oil projects with a combined
peak production capacity of up to 78 000 barrels a
day at a less advanced stage of development (table
3.16). Two of these projects are located in offshore
north-western Australia, and another project in the
Gippsland Basin offshore Victoria.
Table 3.15 Oil projects at an advanced stage of development, as at October 2009

Project
Company
Basin
Status
Start up
Capacity
Capital
Expenditure
($m)
Montara/Skua
oilfield
PTTEP
Bonaparte
under
construction
na
38 kbpd
US$700 m
(A$843 m)
Van Gogh
Apache
Energy/ Inpex
Carnarvon
under
construction
2010
38 kbpd
US$546 m
($658 m)
Pyrenees
BHP Billiton/
Apache Energy
Carnarvon
under
construction
2010
96 kbpd,
23 PJ pa gas
US$1.68 b
(A$2 b)
Source: ABARE 2009d
Table 3.16 Oil projects at a less advanced stage of development, as at October 2009
Project
Company
Basin
Status
Start up
Capacity
Capital
Expenditure
($m)
Basker, Manta
and Gummy oil
development
Roc Oil/Beach
Petroleum
Gippsland
Expansion
na
10 kbpd
na
Crux liquids
project
Nexus Energy/
Osaka gas
Browse
FEED study
completed
na
38 kbpd
condensate
US$650 m
(A$783 m)
Talbot oil field
AED Oil
Bonaparte
Feasibility
study under
way
na
1020 kbpd
na
Source: ABARE 2009d
C H A PTE R 3: OIL
3.5 References
Economics), 2008, Australian Commodity Statistics 2008,
Canberra
ABARE, 2009a, Energy in Australia 2009, Canberra
ABARE, 2009b, Australian Energy Statistics, Canberra,
August
ABARE, 2009c, Australian Commodities, vol.16, no.2, June
quarter, Canberra
ABARE, 2009d, Minerals and energy: Major development
projects October 2009 listing, ABARE, Canberra,
November
ABARE, 2010, Australian energy projections to 202930,
ACIL Tasman, 2008, An assessment of Australias liquid
fuel vulnerability, report prepared for Department of
Resources, Energy and Tourism, November 2008,
<http://www.ret.gov.au/energy/energy_security/emergency_
response/liquid_fuel_emergency/lfe_vulnerability/Pages/
lfe_vulnerability.aspx>
Anadarko, 2007, Record-setting Independence hub starts
production, <http://www.anadarko.com/Investor/Pages/
NewsReleases/NewsReleases.aspx?release-id=1028609>
APPEA (Australian Petroleum Production and Exploration
Association), 2009, State of the Industry. Attachment 2,
APPEA submission to Energy White Paper, <http://www.
ret.gov.au/energy/facts/white_paper/list_of_sub/appea/
Pages/default.aspx>
Australian Bureau of Statistics, 2009, 8412.0 Mineral and
Petroleum Exploration, Australia, 2008 quarterly issues,
<http://www.abs.gov.au/ausstats/abs@.nsf/mf/8412.0>
Australian Institute of Petroleum, 2007, Downstream
Petroleum 2007, <http://www.aip.com.au/industry/
dp2007/index.htm>
Australian Marine Safety Authority (AMSA), 2009, The
national plan to combat pollution of the sea by oil and other
noxious and hazardous substances, <http://www.amsa.gov.
au/Marine_Environment_Protection/National_Plan>
Geoscience Australia, 2004, Oil and gas resources of

Australia 2002, Geoscience Australia, Canberra
Geoscience Australia, 2009a, Oil and Gas Resources of
Australia 2008 Report, <http://www.ga.gov.au/oceans/
pgga_OGRA.jsp>
Geoscience Australia, 2009b, Australias Identified Mineral
Resources 2009. Geoscience Australia, Canberra, <https://
www.ga.gov.au/products/servlet/controller?event=GEOCAT_
DETAILS&catno=69951>
Hashimoto T, Rollet N, Higgins K, Bernardel G and Hackney
R, 2008, Capel and Faust basins: Preliminary assessment
of an offshore deepwater frontier region, in: JE Blevin,
BE Bradshaw, and C Uruski (eds), Eastern Australasian
Basins Symposium III: Energy security for the 21st
century, Petroleum Exploration Society of Australia Special
Publication, 311316
Hogan L, Thorpe S, Zheng S, Ho Trieu L, Fok G and
Donaldson K, 1996, Net Economic Benefits from Australias
Oil and Gas Resources: Exploration, Development and
Production, ABARE Research Report 96.4, Canberra
International Energy Agency (IEA), 2007, Energy
technologies at the cutting edge, Paris
IEA, 2008, World energy outlook 2008, Paris
IEA, 2009a, Oil information, 2009 edition, IEA online data
services, OECD, Paris
IEA, 2009b, World Energy Balances, 2009 edition, IEA
online data services, OECD, Paris
IEA, 2009c, World energy outlook 2009, Paris
Johnson RC, Mercier TJ, Brownfield ME, Pantea MP and Self
JG, 2009, Assessment of in-place oil shale resources of the
Green River Formation, Piceance Basin, western Colorado:
U.S. Geological Survey Fact Sheet 20093012
Jones PE, 1988, Oil: A practical guide to the economics of
world petroleum, Woodhead-Falkener, Cambridge, UK
Bradshaw MT, Foster CB, Fellows ME and Rowland DC,

1999, The Australian search for petroleum patterns of
discovery, The APPEA Journal, 39 (1), 118
Klett TR and Gautier DL, 2003, Characteristics of reserves

growth in oil fields of the North Sea Graben area, Paper
Z-99,4, EAGE 65th Conference and Exhibition, Stavanger,
Norway, 25 June
Branan N, 2008, Exploration and innovation: Geoscientists

push the frontiers of unconventional oil and gas, <http://
www.jsg.utexas.edu/news/feats/2008/exploration_
innovation.html>
Longley IM, Bradshaw MT and Hebberger J, 2001, Australian

Petroleum Provinces of the 21st Century, in: M Downey, J
Threet and W Morgan (eds.), Petroleum Provinces of the
21st Century, AAPG Memoir 74
BP, 2009a, BP statistical review of world energy, London,

June
Longley IM, Buessenschuett C, Clydsdale L, Cubitt CJ, Davis

RC, Johnson MK, Marshall NM, Murray AP, Somerville R,
Spry TB and Thompson NB, 2002, The North West Shelf of
Australia a Woodside perspective. In: Keep M and Moss
SJ, (editors), The Sedimentary Basins of Western Australia
3: Proceedings of the Petroleum Exploration Society of
Australia Symposium, Perth, 2788
BP, 2009b, Tiber drilling to new depths, <http://www.

bp.com>
Centre for Economics and Management (CEM), 2004,
Oil and gas exploration and production: reserves, costs,
contracts, Editions Technip, Paris
Department of the Environment, Water, Heritage and the
Arts (DEWHA), 2008, Current Marine Protected Areas of
Australia, <http://www.environment.gov.au/coasts/mpa/
index.html>
Magoon LB and Dow WG, 1994, The petroleum system. In

Magoon LB and Dow WG, (editors) The petroleum system
from source to trap. AAPG Memoir 60, AAPG, Tulsa, USA,
324
McCabe PJ, 1998, Energy resources Cornucopia or
empty barrel? American Association of Petroleum Geologists
Bulletin, V 82, no. 11, 21102134
81
McFarland JD, 2001, Shale oil a new production

development paradigm, The APPEA Journal, 47 (1),
663670
Ozimic S and Saxby JD, 1983, Oil Shale Methodology:
An examination of the Toolebuc Formation and the laterally
contiguous time equivalent units, Eromanga and Carpentaria
Basins. Bureau of Mineral Resources and CSIRO research
project
Powell TG, 2001, Understanding Australias petroleum
resources, future production trends and the role of the
frontiers, The APPEA Journal, 41 (1), 273288
Powell TG, 2004, Australias hydrocarbon resources
where will future production come from? The APPEA Journal,
44 (1), 729740
Santos, 2009, Moomba Carbon storage project, <http://
www.santos.com/activities-browser/moomba-carbonstorage-project.aspx>
Shell, 2009, Perdido, <http://www.shell.com/home/
content/aboutshell/our_strategy/major_projects_2/
perdido/perdido_13032008.html>
Totterdell JM, Struckmeyer HIM, Boreham CJ, Mitchell CH,
Monteil E and Bradshaw BE, 2008, Mid-Late Cretaceous
organic-rich rocks from the eastern Bight Basin: implications
for prospectivity. In: Blevin, JE, Bradshaw, BE and Uruski,
C (eds), Eastern Australasian Basins Symposium III,
Petroleum Exploration Society of Australia, Special
Publication, 137158
82
USDOE (United States Department of Energy), 2007, Secure

fuels from domestic resources: The continuing evolution
of Americas oil shale and tar sands industries. Profiles of
companies engaged in domestic oil shale and tar sands
resource and technology development. Office of Petroleum
Reserves, Office of Naval Petroleum and Oil Shale
Reserves, June
USGS (United States Geological Survey) Geological Survey
World Energy Assessment Team, 2000, US Geological
Survey World Petroleum Assessment 2000 Description
and results. USGS Digital Data Series DDS-60
Walker TR, 2007, Deepwater and frontier exploration in
Australia historical perspectives, present environment and
likely future trends. The APPEA Journal, 47 (1), 115
Wilkinson R, 2006, Speaking oil and gas, BHP Billiton
Petroleum, Australia
Williamson PE and Kroh F, 2007, The role of amplitude
versus offset technology in promoting offshore petroleum
exploration in Australia, The APPEA Journal, 47 (1),
161174
Wright D, Le Poidevin S and Morrison G, 1990, Potential
from enhanced oil recovery applications in Australia. Bureau
of Mineral Resources Record 1991/20, Canberra
WEC (World Energy Council), 2007, 2007 Survey of energy
resources, World Energy Council, London, United Kingdom
WEC, 2009, Survey of energy resources, interim update
2009. World Energy Council, London, United Kingdom
Chapter 4
Gas
4.1 Summary
Key messages

Australia has significant gas resources; gas is Australias third largest energy resource after coal
and uranium.
Most of the conventional gas resources are located off the north-west coast of Australia and are
being progressively developed for LNG export and domestic use.
Significant coal seam gas resources exist in the major coal basins of eastern Australia and are
being developed for domestic use and potential export.
Australias gas resources are large enough to support projected domestic and export market
growth beyond 2030 and are to expected grow further.
Gas is a relatively flexible and clean energy source and is projected to be the fastest growing
fossil fuel over the period to 2030.
Gas is expected to significantly increase its share of Australias energy production and exports,
and make a substantially greater contribution to electricity generation.
4.1.1 World gas resources and market

Gas is the third largest global energy source,
currently accounting for around 21 per cent of
global primary energy consumption. Global gas
consumption has increased by 2.8 per cent per
year since 2000, to reach 121 280 PJ (107 tcf)
in 2008.
Global LNG trade has expanded even more
rapidly by 6.1 per cent per year since 2000
to reach 8850 PJ (168 Mt, 8 tcf) in 2008. LNG
trade accounts for around 7 per cent of global
gas consumption.
Global gas proved reserves are estimated to
have been around 7.2 million PJ (6534 tcf) at
the end of 2008. This is equal to more than 60
years supply at current production rates. While
information is limited, global unconventional gas
resources in place are estimated to be more
than four times this amount, in the order of
35.8million PJ (32 500 tcf).
This expansion in global demand will increasingly

be met by imports, including LNG from countries
such as Australia. Global LNG trade is projected
by the IEA to rise by 3.7 per cent per year to reach
17104PJ (314 Mt, 15 tcf) in 2030.
The recent rapid growth in unconventional gas
resources and production worldwide could reduce
LNG export opportunities in some markets but is
likely to have less impact on Asian markets.
4.1.2 Australias gas resources

Gas is Australias third largest energy resource
after coal and uranium. This is unlikely to change
in the period leading up to 2030.
Australia accounted for nearly 2 per cent of world

gas reserves and production in 2008. However,
Australia is the worlds sixth largest LNG exporter
and accounted for 9 per cent of world LNG trade
in 2008.
Most (around 92 per cent) of Australias

conventional gas resources are located in the
Carnarvon, Browse and Bonaparte basins off
the north-west coast. There are also resources
in south-west, south-east and central Australia.
Large coal seam gas (CSG) resources exist in the
coal basins of Queensland and New South Wales.
Tight gas accumulations are located in onshore
Western Australia and South Australia, while
potential shale gas resources are located in the
Northern Territory (figure 4.1).
Global gas demand is projected by the

International Energy Agency (IEA) in its reference
case to increase by 1.5 per cent per year to reach
149 092 PJ (132tcf) in 2030.
In 2008, Australias economic demonstrated

resources (EDR) and subeconomic demonstrated
resources (SDR) of conventional gas were
estimated at 180 400 PJ (164 tcf). At current
83
production rates there are sufficient EDR

(122100 PJ, 111 tcf) of conventional gas to
last another 63 years (figure 4.2).
168 600 PJ (153tcf), including sub-economic

resources (SDR) estimated at 30 000 PJ
(27.3tcf) and inferred of 122 020 PJ (111 tcf).
Tight gas resources are estimated at around
22 000 PJ (20 tcf). Australia may also have
significant but as yet unquantified shale gas
resources. No reserves of tight gas or shale gas
are currently booked.
In addition there is a possible 22 000 PJ (20 tcf)

of inferred conventional gas resources in recently
discovered fields and other fields not booked as
part of EDR and SDR.
Gas exploration has a sustained record of
success, with the strong likelihood of finding more
conventional gas resources. Field growth and new
discoveries will help offset increasing production
so that identified conventional gas resources
in 2030 will remain substantial and capable of
supporting several decades of future production.
120
Production
Tcf
80
Australia also has significant unconventional gas

resources CSG, tight gas and shale gas. Coal
seam gas economic demonstrated resources
(EDR) at the end of 2008 were 16 590 PJ
(15.1tcf), smaller recoverable resources than
several of Australias individual conventional
gas fields but equal to more than 100 years of
CSG production at current rates. Total identified
resources of CSG are estimated to be around
110
120
EDR
100
63 years remaining
at current production
levels
60
40
20
0
1982
1985
1988
1991
1994
1997
2000
2003
2006 2008
Year
AERA 4.2
Figure 4.2 Conventional gas resources and production

130
140
150
BONAPARTE BASIN
Conventional Gas Produced: 647

Conventional Gas Remaining: 26 119
84
BROWSE BASIN

DARWIN
750 km
10
CARNARVON BASIN
Conventional Gas Produced: 14 388

BOWEN BASIN

Conventional Gas Remaining: 441
CSG Produced: 93
CSG Remaining: 5524
CANNING BASIN

AMADEUS BASIN

ADAVALE BASIN

COOPER/EROMANGA/
WARBURTON BASINS
PERTH BASIN
Gas resources (in PJ)

Past production
Conventional gas
resources
Coal seam gas
resources
GUNNEDAH BASIN

CSG Produced: 0
CSG Remaining: 336
PERTH
ADELAIDE
OTWAY BASIN

MELBOURNE
Gas processing
plant
CSG Produced: 0
CSG Remaining: 298
GLOUCESTER BASIN
CSG Produced: 0
CSG Remaining: 176
30
SYDNEY
SYDNEY BASIN
CSG Produced: 5
CSG Remaining: 67
GIPPSLAND BASIN
Gas pipeline
Gas pipeline
(proposed)

CSG Produced: 40
CSG Remaining: 9778
BRISBANE
CLARENCEMORETON BASIN


20
SURAT BASIN

BASS BASIN

HOBART
40
Gas basin
AERA 4.1
Figure 4.1 Location of Australias gas resources and infrastructure

C H APTE R 4: GAS
Total identified gas resources are sufficient

to enable significant expansion in Australias
domestic and export production capacity.
Australias combined identified gas resources
are in the order of 393 000 PJ (357 tcf). This
is equal to around 180 years of gas at current
production rates, of which EDR accounts for
67 years.
The distribution of gas resources in 2030
is expected to follow a similar pattern with
substantial conventional gas resources offshore
and unconventional resources identified across
several onshore basins.
4.1.3 Key factors in utilising

Australias gas resources
Most of Australias conventional gas resources
are located offshore far from domestic gas
markets, which affects the costs of bringing
the resource to market.
Development of secure long-term markets
is necessary to underpin the major capital
investment required for development of the
offshore gas resources of north-west Australia.
Potential environmental issues raised by gas
development may include the disposal of water
produced from onshore coal seam gas operations
and carbon dioxide contained in some large
offshore gas fields.
New gas pipelines will be required, particularly in
eastern Australia, to provide sufficient supply for
new gas-fired electricity generation in response to
demand for cleaner energy.
4.1.4 Australias gas market
accounted for 22 per cent (1249 PJ) of Australias

primary energy consumption in 200708, and 16
per cent of electricity generation.
The main gas users in Australia are the
manufacturing, electricity generation, mining and
residential sectors.
The expansion in gas production over this period
has been even stronger. Gas production was
1833 PJ (1.6 tcf) in 200708. Unconventional
gas production, in the form of coal seam gas,
accounted for 7 per cent of this production.
No tight or shale gas is currently produced
in Australia.
Around 44 per cent (802 PJ, 14.3 Mt) of
Australian gas production was exported as LNG,
valued at $5.9 billion, in 200708. Higher export
volumes and international oil prices increased the
value of exports in 200809 to $10.1 billion.
4.1.5 Outlook to 2030 for the

Australian gas market
Growth in gas consumption is expected to be
driven by investment in new gas-fired power
generation and by policy initiatives supporting
gas uptake as a relatively clean energy source.
An emissions reduction target is expected to
enhance the role of gas as a transitional fuel
to a low carbon economy. Gas-fired electricity
generation has lower carbon emissions than
coal-fired electricity without carbon capture and
storage, and can also be linked with intermittent
renewable energy resources such as wind to
provide a flexible and reliable power source.
9000
3000
36
Exports
2500
30
Domestic
consumption
2000
24
1500
18
1000
12
500
8000
5000
Production
4000
PJ
PJ
6000
3000
Demand for LNG is likely to grow in overseas

markets, driven by similar factors to those in
Australia.
Australian gas consumption has grown by 4

per cent per year over the past decade. Gas
7000
85
2000
1000
0
0
1999-00
2009-10
2019-20
Year
2029-30
AERA 4.3
0
199900
200002
200304
200506
200708
202930
Year
Primary consumption
(PJ)
Share of total
(%)
Figure 4.3 Outlook to 2030 for the Australian gas

market
Figure 4.4 Outlook to 2030 for Australian gas

consumption
Source: ABARE 2009a, 2010
AERA 4.4
In ABAREs latest long-term projections which

include a 5 per cent emissions reduction
target, the Renewable Energy Target and other
government policies, gas consumption in Australia
is projected to increase by 3.4 per cent per year
to reach 2575PJ (2.3 tcf) in 202930. Its share
of primary energy consumption is projected to rise
to 33 per cent in 202930 (figures 4.3 and 4.4).
Australian gas production is projected to reach
8505 PJ (7.7 tcf) in 202930. Coal seam gas is
projected to account for 29 per cent of this total.
LNG exports are expected to account for around
70 per cent of Australian gas production in
202930, with exports projected to increase
to 5930PJ (109 Mt) in 202930. As well
as the major announced and potential LNG
developments in north-west Australia, there are
well-advanced plans to export coal seam gas as
LNG from Queensland in the next decade.

and world market
4.2.1 Definitions
Natural gas is a combustible mixture of
hydrocarbon gases. It consists mainly of methane
(CH4), with varying levels of heavier hydrocarbons
and other gases such as carbon dioxide. Natural
gas is formed by the alteration of organic matter
(box 4.1). When accumulated in a subsurface
reservoir that can be readily produced it is known
as conventional gas. Conventional gas can also
be found with oil in oil fields. Conventional gas
fields can be dry (almost pure methane) or wet
(associated with the wet gas components
ethane, propane, butanes and condensate). Dry
gas has a lower energy content than wet gas.
Natural gas can also be found in more difficult to
extract unconventional deposits, such as coal beds
Box 4.1 NATURAL GAS Chemistry and Formation
86
Natural gas is composed of a mixture of combustible

hydrocarbon gases (figure 4.5). These include methane
(CH4), ethane (C2H6), propane (C3H8), butane (C4H10)
and condensate (C5+). Most natural gas is methane
but because of the variable additions of the heavier
hydrocarbons, gas accumulations vary in their energy
content and value (Appendix E).
though it is stored and transported as a liquid under

pressure (for example in domestic barbecue gas
bottles). Condensate is a mixture of pentane (C5H12)
and heavier hydrocarbons that condense at the
surface when a gas accumulation is produced.
The gas liquids, LPG and condensate, are discussed
in Chapter 3 (Oil).
Liquefied Natural Gas (LNG) is primarily composed of the

lightest hydrocarbons, methane (CH4) and ethane (C2H6).
It is produced by cooling natural gas to around -160C
where it condenses to a liquid taking up about 1/600th
the volume of natural gas in the gaseous state.
Natural gas is formed by the alteration of organic

matter. This can occur through biogenic or thermogenic
processes. The bacterial decomposition of organic
matter in oxygen-poor environments in the shallow
subsurface produces biogenic gas, for example landfill
gas see Chapter 12 (Bioenergy). Biogenic gas is very
dry, being almost pure methane.
Liquefied Petroleum Gas (LPG) is a mixture of the

light hydrocarbons propane (C3H8) and butane (C4H10)
and it is normally a gas at surface conditions,
Methane
CH 4
Ethane
C2H 6
LNG
Gas at
surface
Propane
C 3H 8
Butane
C 4H10
LPG
Gas in
subsurface
C 5+
Condensate
and oil
C 35
Liquid at
surface
Liquid in
subsurface
AERA 4.5
Figure 4.5 Petroleum resources nomenclature in terms

of chemical composition, commercial product, physical
state in the subsurface and physical state at the surface
Thermogenic natural gas is derived from the

thermal alteration of organic matter buried deep
within sedimentary basins over geological time.
Thermogenic gas is generated with oil as the organic
matter is heated and buried; with further burial and
heating, oil will be cracked to gas and pyrobitumen.
Hence, natural gas is preserved within a sedimentary
basin over a greater depth and temperature range
than oil.
There are isotopic methods to distinguish biogenic
from thermogenic gas. Evidence of thermogenic
gas indicates that a petroleum system is working
and leaves open the possibility that oil may
also occur. Most Australian conventional gas
accumulations are considered to be thermogenic
in origin (Boreham etal. 2001), though some of
the dry gas accumulations such as Tubridgi in the
onshore Carnarvon Basin (Boreham et al. 2008)
have a biogenic source input. A significant biogenic
contribution is recognised in Australian coal seam
gas (Draper and Boreham 2006).
C H APTE R 4: GAS
(coal seam gas), or in shales (shale gas), low quality

reservoirs (tight gas), or as gas hydrates (box 4.2).
Coal seam gas (CSG) is naturally occurring methane
gas in coal seams. It is also referred to as coal
seam methane (CSM) and coal bed methane
(CBM). Methane released as part of the coal mining
operations is called coal mine methane (CMM). Coal
seam gas is dry gas, being almost entirely methane
with the gas molecules remaining adsorbed in the coal
rather than migrating to a conventional gas reservoir.
Tight gas occurs within low permeability reservoir
rocks, that is rocks with matrix porosities of 10 per
cent or less and permeabilities of 0.1 millidarcy (mD)
or less, exclusive of fractures (Sharif 2007). Tight
gas can be regionally distributed (for example, basincentred gas), or accumulated in a smaller structural
closure as in conventional gas fields.
Shale gas is natural gas which has not migrated
to a reservoir rock but is still contained within low
permeability, organic-rich source rocks such as
shales and fine-grained carbonates.
Gas hydrates are a potential unconventional gas
resource. Gas hydrates are naturally occurring ice-like
solids (clathrates) in which water molecules trap gas
molecules in deep-sea sediments or in and below the
permafrost soils of the polar regions.
Liquefied natural gas (LNG) is natural gas that
is cooled to around -160C until it forms a liquid,
to make it easier and cheaper to transport long
distances in LNG tankers to markets.
Development and
Production
Resource and Exploration
Exploration
decision
As an end-use product, unconventional gas is similar

to conventional natural gas. It can be added to
natural gas pipelines without any special treatment
and utilised in all natural gas applications such as
electricity generation and commercial operations.
4.2.2 Gas supply chain

Figure 4.6 illustrates the simplified operation of the
gas industry in Australia. Resources are delivered
to domestic and export markets through the
successive activities of exploration, development,
production, processing and transport. While different
technologies can be used for extracting CSG and
other unconventional gas, once extracted it is
indistinguishable from conventional natural gas,
and the supply chain is the same.
Resources and exploration

Exploration for conventional gas follows the same
process as for oil. Geoscientists identify areas
where hydrocarbons are liable to be trapped in
the subsurface, that is in sedimentary basins of
sufficient thickness to contain mature petroleum
source rocks as well as suitable reservoir and seal
rocks in trap configurations. The search narrows
from broad regional geological studies through to
determining an individual drilling target. Reflection
seismic is the primary technology used to identify
likely hydrocarbon-bearing structures in the subsurface (figure 4.7). There must also be evidence of
a working petroleum system (box 4.2). Such evidence
includes the presence of other petroleum discoveries
in the case of a proven basin, or indications of
the presence of organic-rich rock to act as a gas
Storage
Export market
Development
decision
LNG Plant
LNG
Tanker
End Use Market
World
Market
Project
Pipeline
Undiscovered
resources
Identified
resources
Electricity
Generation
Processing
Plant
Domestic market
Industry
Commercial
Pipeline
Residential
AERA 4.6
Figure 4.6 Australias gas supply chain

87
source in the case of frontier basins. Drilling is

required to test whether the putative hydrocarbon
trap contains oil or gas, both, or neither. Successful
wells are commonly tested to recover a sample of the
hydrocarbons for analysis to determine gas quality
(liquids content, presence of CO2) and to determine
likely production rates. The initial discovery well may
be followed by appraisal drilling and/or the collection
of further survey data to help determine the extent of
the accumulation.
For example, an offshore well drilled to 30004000m

in water depth of 100200 m typically costs $3050
million (roughly $1 million per day of drilling), depending
on location, water depth and other considerations.
Shallow wells drilled to 2001000m in CSG exploration
and development typically cost around $300 000 to $1
million (around $1000 per metre) with an average cost
of around $500 000 per well (company reports and
Geoscience Australia estimates).
In Australia, government has taken a key role in

providing regional pre-competitive data to encourage
private sector investment in exploration. Company
access to prospective exploration areas is by
competitive bidding, usually in terms of proposed
work program, or by taking equity (farming-in) in
existing acreage holdings.
Once a decision to proceed has been made and

financial and regulatory requirements addressed,
infrastructure and production facilities are developed.
For offshore conventional gas accumulations this
involves the construction of production platforms
with the gas piped to onshore processing plants,
although there are proposals to develop some remote
gas fields with floating LNG processing facilities
on-site. Production of CSG resources requires the
drilling of many shallow wells and removal of water
to de-pressurise the coal formation before gas flow
is established. Hydraulic fracturing combined with
horizontal drilling is used to achieve commercial flow
rates from tight gas and shale gas formations.
Exploration for unconventional gas differs somewhat

from the search for conventional hydrocarbons,
especially when the target is a broadly distributed
stratigraphic formation such as a coal bed or shale.
Seismic surveys and drilling still constitute the major
exploration technologies. However, the distribution
of the prospective formation is usually well known at
the regional scale, and exploration success depends
on identifying parts of the formation where the
gas resource and reservoir quality are sufficient to
sustain a flow of gas on a commercial scale.
Most of Australias conventional gas exploration
occurs in the offshore basins, sometimes in water
depths beyond 1000 m and with target depths from
about 2000 to over 4000 m below the sea floor. The
search for CSG, tight gas and shale gas is restricted
to onshore basins and target depths range from a
few hundred metres to about 1000 m. The costs of
the different exploration components especially
seismic and drilling vary markedly depending on the
scope and location of the project, logistics, and other
factors. Many shallow onshore CSG wells can be
drilled for the cost of one deep well in deep water.
Two-way time (s)
88
3 km
AERA 4.7
Figure 4.7 Seismic section across a prospective gas

accumulation on the Exmouth Plateau, Carnarvon Basin
Source: Williamson and Kroh 2007
Processing, transport and storage

The gas extracted from the well requires processing
to separate the sales gas from other liquids and
gases that may be present, and to remove water,
carbon dioxide and other impurities before it can be
transported efficiently by pipeline or ship. As a result,
processing tends to occur near the production well.
Apart from small quantities used on site for electricity
generation or other purposes, gas usually requires
transport for long distances to major markets.
This is managed in Australia by gas pipeline (for
domestic use), and in liquefied form (LNG) by
tanker (for export). Gas in pipelines travels at high
pressures, which reduces the volume of the gas
being transported as well as providing the force
required to move through the pipeline. LNG is natural
gas that has been cooled to around -160C at which
temperature it becomes a liquid and has shrunk
in volume some 600 times. Liquefaction reduces
the volume and the cost of transportation over long
distances. However, it typically consumes 1015 per
cent of the gas in the process.
Natural gas not used immediately can be placed
in storage until it is needed. Normally, it is stored
underground in large reservoirs, but can also be
stored in liquefied form. Gas can be reinjected
into depleted reservoirs for later use following the
extraction of oil and other liquids.
Seismic expression of
possible gas reservoir
End use market

While major industrial users and electricity generators
tend to receive natural gas directly, most users
receive gas through distribution companies. As an
C H APTE R 4: GAS
Box 4.2 Petroleum Systems and Resource Pyramids

Conventional accumulations of oil and gas are
the products of a petroleum system (Magoon and
Dow 1994). The critical elements of a petroleum
system (figure 4.8) are:
source an organic-rich rock, such as an
organic-rich mudstone;
reservoir porous and permeable rock, such as
sandstone;
seal an impermeable rock such as a shale;
trap a sub-surface structure that contains the
accumulation, such as a fault block or anticline;
overburden sediments overlying the source
rock required for its thermal maturation; and
migration pathways to link the mature source to
the trap.
extract unconventional gas and oil (figure 4.9).

For the unconventional hydrocarbon resources
additional technology, energy and capital has to
be applied to extract the gas or oil, replacing the
action of the geological processes of the petroleum
system. Technological developments and rises in
price can make the lower parts of the resource
pyramid accessible and commercial to produce.
The recent development of oil sands in Canada and
of shale gas in the United States are examples where
rising energy prices and technological development
has facilitated the exploitation of unconventional
hydrocarbon resources lower in the pyramid.
In addition to these static elements, the actual

processes involved trap formation, hydrocarbon
generation, expulsion, migration, accumulation and
preservation must occur, and in the correct order, for
the petroleum system to operate successfully and gas
and oil accumulations to be formed and preserved.
requirements
Increased breakeven
price required
Smaller volumes,
easy to develop
Conv.
Oil
Larger volumes,
difficult to
develop
Unconventional gas accumulations reflect the failure

or under-performance of the petroleum system.
Shale gas and coal seam gas arise where the
natural gas is still within the source rock, not having
migrated to a porous and permeable reservoir.
Tight gas accumulations are within a poor quality
reservoir. The petroleum resource pyramid (McCabe
1998) illustrates how a smaller volume of easy to
extract conventional gas and oil is underpinned by
larger volumes of more difficult and more costly to
Conv.
Gas
Heavy Oil
CSG
Tar Sands
Tight Gas
and Shale Gas
Shale Oil
Gas Hydrates
AERA 4.9
Figure 4.9 Petroleum resource pyramid

Source: Geoscience Australia, adapted from McCabe 1998
and Branan 2008
Geographic extent of petroleum system

Present day
Trap
Trap
Trap
Stratigraphic extent
of petroleum system
Basement
AERA 4.8
Overburden
Source
Shale gas potential
Seal
Underlying sequence
Top of gas window
Reservoir
Gas accumulation
Figure 4.8 Petroleum system elements

Source: Modified after Magoon and Dow 1994
89
end-use product, unconventional gas may be added

to gas pipelines without any special treatment
and utilised in all gas appliances and commercial
applications.
4.2.3 World gas market

Table 4.1 provides a snapshot of the Australian gas
market within a global context. Australian reserves
account for only a small share of global reserves,
and Australia is a relatively small producer and
consumer. However, natural gas reserves are
significant at the national level, and natural gas
plays an important role in the Australian energy mix.
Australia has also emerged as a significant player in
world LNG trade.
Reserves and production

Proved world gas reserves those quantities that
geological and engineering information indicates with
reasonable certainty can be recovered in the future
from known reservoirs under existing economic and
operating conditions were estimated to be more
than 7.2 million PJ (6534 tcf) at the end of 2008.

At current rates of world production, this is sufficient
for more than 60 years (BP 2009). The Russian
Federation, Iran and Qatar together hold more than
half of the worlds proved gas reserves (figure 4.10).
Australia accounts for around 1.7 per cent of global
reserves (table 4.1).
The IEA estimates that there are nearly 15.7 million
PJ (14 285 tcf) of remaining recoverable resources
of conventional gas. This is equivalent to almost 130
years of production at current rates (IEA 2009c).
World gas production in 2008 was estimated at
120711 PJ (107 tcf). The largest gas producers
are the Russian Federation and the United States.
Australia is the worlds nineteenth largest gas
producer, accounting for around 1.5 per cent of
world gas production (IEA 2009b, figure 4.10).
Consumption
Natural gas currently accounts for around 21 per
cent of world primary energy consumption. World gas
Table 4.1 Key gas statistics, 2008
Reserves
90
Unit
Australia
200708
Australia
2008
OECD
2008
World
2008
PJ
122 100
645 700
7 187 400
tcf
111
587
6534
Share of world
1.7
100
World ranking
no.
14
Production
PJ
1833
1832
44 773
120 711
tcf
1.6
1.6
40
107
Share of world
1.5
37
100
World ranking
no.
19
4.2
4.1
0.7
2.8
Annual growth in production 20002008

PJ
1249
1351
59 992
121 280
tcf
1.1
1.2
53
107
Share of world
1.1
49
100
World ranking
no.
27
21.6
20.5
23.7
20.9
Share of total primary energy consumption

Annual growth in consumption 20002008
Share of total
4.0
5.3
1.4
2.8
TWh
42
2343
4127
15.9
22.0
20.9
Mt
14.3
15.0
146
168
Export
LNG export volume
tcf
0.7
0.7
7.0
8.0
Share of world
8.9
87
100
World ranking
no.
LNG export value
A$b
5.9
9.2
8.5
6.1
Annual growth in export volume 200008
Note: World share of total primary energy consumption and electricity generation are 2007 data; Australian production excludes imports
from Joint Petroleum Development Area (JPDA)
Source: BP 2009; IEA 2009a, b; ABARE 2009a, b

C H APTE R 4: GAS
Some 39 per cent of world gas consumption is for

power generation, with the industry and residential
sectors accounting for a further 18 per cent and 16
per cent respectively (IEA 2009b). The share of gas
in total world electricity generation was 21 per cent
in 2007, although this varies widely among countries
Trade
With gas reserves located some distance from
key gas consuming countries, world gas trade has
increased as a proportion of total consumption.
In 2008, 30 per cent of world gas consumption
120
120
100
a) Gas consumption by region

a) Gas consumption by region
100
80
Tcf
Natural gas is used all around the world (figure 4.11).

The main gas consumers are the United States and
the Russian Federation, followed by Iran and Japan.
The Asia Pacific region accounted for around 16 per
cent of world natural gas consumption in 2008,
with Australia accounting for around 1.1 per cent
(IEA 2009b).
(figure 4.11; IEA 2009a). In Australia, the share of gas

in total electricity generation is around 16 per cent.
80
60
Tcf
consumption has grown steadily over the past few

decades, by around 2.9 per cent per year between
1971 and 2008 (IEA 2009b). Contributing factors
include increased emphasis on environmental issues,
which favours the clean combustion properties
of gas relative to other fossil fuels, the uptake of
technologies such as integrated gas combined cycle
power plants, and the commercialisation of abundant
gas reserves. Energy security and fuel diversification
policies have helped encourage gas demand as a
means of reducing dependence on imported oil.
60
40
40
20
20
0
0
1971
1971
1975
1980
1975
1980
1985
1985
Non-OECD
Asia Pacific
Non-OECD
Middle
East
Asia
Pacific
1990
1995
Year
1990
1995
Year
a) Proven gas reserves to end 2008
Qatar
Turkmenistan
Saudi Arabia
2000
2005 2008
OECDAmerica
Asia
Latin
Pacific
OECD Asia
OECD North
Pacific
America
OECD North
OECD Europe
America
Former Soviet
Africa
Union
Former Soviet
Non-OECD
Union
Europe
Non-OECD
Europe
Iran
2005 2008
Latin America
Middle East
Africa
Russian Federation
2000
OECD Europe
91
b) Gas share in electricity generation,

selected countries 2008
b) Gas share in electricity generation,
World
selected countries 2008
United States
Nigeria
Venezuela
Algeria
Australia
0
300
600
900
1200
1500
2000
Tcf
b) Gas production 2008

Russian Federation
United States
Canada
Iran
Norway
Algeria
Qatar
Indonesia
China
United Kingdom
Australia
AERA 4.10
10
15
20
Tcf
Figure 4.10 World gas reserves and production, major

countries, 2008
Source: BP 2009; IEA 2009b
Non-OECD total
World
OECD total
Non-OECD total
China
OECD total
France
China
Canada
France
India
Canada
Germany
India
Indonesia
Germany
Australia
Indonesia
Republic of Korea
Australia
United States
Republic of Korea
New Zealand
United States
Japan
New Zealand
Spain
Japan
United Kingdom
Spain
Russian Federation
United Kingdom
Mexico
Russian Federation
Italy
Mexico
Thailand
Italy
Singapore
Thailand
Singapore 0
25
20
20
40
40
60
60
80
AERA 4.11
80
Figure 4.11 World gas consumption% and the share of

AERA 4.11
gas in electricity generation
Note: Shares in 4.11b for non-OECD and world are 2007 data
Source: IEA 2009a, b
was supplied through international trade. Trade as

a proportion of gas consumption is much higher
in the Asia Pacific region, where countries such
as Japan and the Republic of Korea are reliant on
imports for much of their gas needs.
LNG imports accounted for one quarter of world

gas trade in 2008, equal to 7 per cent of world gas
consumption; the remainder was transported by
pipeline. With fewer international pipelines in the
Asia Pacific region, the share of gas trade met by
LNG imports is much higher, at 83 per cent (around
31per cent of consumption) (IEA 2009b).
160
World
Mt
120
Australia
80
40
0
1980
1985
1990
1995
2000
2005
Year
2008
AERA 4.12
Figure 4.12 World LNG trade
The role of unconventional gas
Source: BP various years
Information about global unconventional gas

resources is much less complete than for conventional
resources, and is less reliable. Although the resources
worldwide are thought to be very large, they are
currently poorly quantified and mapped (IEA2009c).
a) LNG exports 2008

Qatar
Malaysia
Indonesia
According to the IEA, unconventional gas (including

coal seam gas, shale gas and tight gas) now amounts
to around 4 per cent of global proven reserves, or
around 0.3 million PJ (257 tcf). World unconventional
gas resources in place are much larger, estimated
to be around 35.8 million PJ (32500 tcf). Around
30per cent of these resources are in the Asia
Pacific, 25 per cent in North America, and 17 per
cent in the Former Soviet Union (IEA 2009c).
Algeria
Nigeria
92
World LNG trade in 2008 was 9118 PJ (168 Mt)

(figure 4.12). World LNG trade is characterised by a
small but increasing number of suppliers and buyers.
In 2008 there were 15 countries exporting LNG
and 18 countries importing LNG, with the Russian
Federation and Yemen commencing exports in 2009.
Qatar is the worlds largest LNG exporter, with 18 per
cent of world trade in 2008 (figure 4.13). Japan is
the worlds largest LNG importer, accounting for 41
per cent of the market. Australia is the worlds sixth
largest LNG exporter, accounting for 9 per cent of
world LNG trade in 2008, and 13 per cent of the Asia
Pacific LNG market (BP 2009).
Australia
Trinidad and Tobago
Egypt
Oman
Brunei Darussalam
United Arab
Emirates
Equatorial Guinea
Norway
United States
Libya
0
10
20
30
Mt
b) LNG imports 2008

Japan
Republic of Korea
Spain
France
Taiwan
India
United States
Turkey
China
Mexico
Portugal
Belgium
Italy
United Kingdom
Greece
Puerto Rico
Dominican Republic
Argentina
Unconventional gas production accounted for 12per

cent of global gas production in 2008. Growth in
unconventional gas production has been especially
strong in North America. The United States accounted
for three-quarters of global unconventional production
with around 12 000 PJ (10.6 tcf). Unconventional
production represents more than half of total US gas
production. Canada was the second largest producer
of unconventional gas, at nearly 2400 PJ (2.1 tcf), or
around one third of its total gas output (IEA 2009c).
World coal seam gas resources in place are
estimated to be around 10.2 million PJ (9047 tcf,
table 4.2). The majority of these resources are in the
Former Soviet Union, North America, and the Asia
Pacific (IEA2009c).
AERA 4.13
20
40
60
Mt
Figure 4.13 World LNG trade, by country, 2008

Source: BP 2009
80
Coal seam gas is produced in more than a dozen

countries, with the United States, Canada, Australia,
India and China (IEA 2009c) predominating. The
United States is the worlds largest CSG producer,
at around 2200 PJ (2.0 tcf) in 2008 (EIA 2009a).
In Australia CSG production was 139 PJ (0.1 tcf)
in 2008 (table 4.2).
C H APTE R 4: GAS
World resources of tight gas and shale gas are also

relatively large, but very uncertain, requiring further
drilling and exploration to quantify. It is estimated that
world tight gas resources are around 8.4 million PJ
(7400 tcf, table 4.3). Around one-quarter of these are
in the Asia Pacific. Other regions with significant tight
gas resources include North and Latin America, the
Middle East and the Former Soviet Union. Shale gas
resources are estimated at around 18.2millionPJ
(16 000 tcf). Similarly, large resources are in the Asia
Pacific, North America, and the Former Soviet Union
(IEA 2009c).
There is limited world production data for shale and
tight gas. Significant quantities of tight gas are now
being produced in more than ten countries. While
tight gas production data in the United States and
Canada are available, in other countries tight gas
production is not generally reported separately from
conventional sources (IEA 2009c).
The United States is the worlds only large-scale
producer of shale gas, producing approximately
2200PJ (2 tcf) in 2008 (EIA 2009b). Canadian
production has also risen in recent years.
Gas hydrates are widely distributed on the continental
shelves and in polar regions (Makogon 2007). Sub-sea
deposits have been identified in the Nankai Trough
south-east of Japan, offshore eastern Republic of
Korea, offshore India, offshore western Canada
and offshore eastern United States. Total worldwide
Table 4.2 Key coal seam gas statistics, 2008
unit
Australia
World
PJ
168 600
10 240 000b
tcf
153
9047b
Share of world
1.6
100
CSG production
PJ
139
2700c
CSG resources
tcf
0.1
2.3
Share of world
5.1
100
CSG share of total

gas production
8.4
5.0
a Total identified CSG resources b Total CSG resources in place

c Estimate includes United States, Canada and Australia only
Source: IEA 2009c; EIA 2009a; Geoscience Australia
Table 4.3 Key tight and shale gas statistics, 2008

unit
Australia
World
PJ
22 000
8 400 000
tcf
20
7400
Share of world
0.3
100
Shale gas
resources
PJ
18 240 000
tcf
16 000
100
Tight gas
resources
Share of world
Source: IEA 2009c; Campbell 2009; Lakes Oil 2009
resources are estimated to be between 40 and 200

million PJ (35 000 to 177 000 tcf) (Milkov 2004). Very
large but unproven potential gas hydrate resources are
reported from the Arctic (Scott 2009).
Currently, commercial production of gas hydrates
is limited to the Messoyakha gas field in western
Siberia, where gas hydrates in the overlying
permafrost are contributing to the flow of gas being
produced from the underlying conventional gas field
(Pearce 2009). However, exploitation of gas hydrates
is a rapidly evolving field. There are active research
programs or experimental production in Canada,
Japan, the Republic of Korea and the United States,
but gas hydrates are not expected to contribute
appreciably to supply in the next two decades
(IEA2009c).
The development of unconventional gas resources
is most advanced in the United States and impacts
on the global LNG market are already evident,
including reduced demand for LNG imports into
the United States. The main driver of commercial
scale exploitation of unconventional resources has
been the successful development and deployment
of technologies that enable these resources to be
produced at costs similar to those of conventional
gas in these countries, particularly with recent high
gas prices (IEA 2009c).
World outlook to 2030

In its 2009 World Energy Outlook (IEA 2009c)
reference case, the IEA projects world demand
for natural gas to expand by 1.5 per cent per year
between 2007 and 2030, to reach 149 092 PJ
(132tcf) in 2030 (table 4.4). The share of gas in
total world primary energy demand is projected to
remain at 21 per cent in 2030.
The majority of the increase in global gas use over
the projection period more than 80 per cent in total
comes from non-OECD countries, particularly in the
Middle East. Demand growth is also strong in China
and India (more than 5 per cent per year). In both of
these countries, while the share of gas in the energy
mix will remain relatively low, the volumes consumed
will be significant in terms of global gas use and
trade. There will be relatively low rates of demand
growth in the more mature markets of North America
and Europe to 2030, although they are expected to
remain the largest markets in absolute terms.
The electricity sector is projected to account for 45
per cent of the increase in world gas demand to
2030, with gas fired power generation projected to
increase by 2.4 per cent per year, to reach 7058
TWh (table 4.5). Low capital costs, short lead times
and a relatively lower environmental impact make
gas-fired power generation an attractive option,
particularly where uncertainties exist on longer term
low emission technology requirements.
93
Table 4.4 Outlook for primary gas demand, IEA reference scenario
unit
2007
2030
OECD
Share of total
PJ
52 712
60 834
tcf
47
54
23
25
Average annual growth 20072030
0.6
Non-OECD
PJ
52 502
88 258
tcf
46
78
20
20
Share of total
2.3
World
PJ
105 172
149 092
tcf
93
132
Share of total
21
21
1.5
unit
2007
2030
Source: IEA 2009c
Table 4.5 Outlook for gas-fired electricity generation, IEA reference scenario
OECD
TWh
2307
2962
Share of total
22
22
1.1
TWh
1819
4097
20
19
Non-OECD
Share of total
3.6
TWh
4126
7058
Share of total
21
21
2.4
World
94
Source: IEA 2009c
The IEA reference case presents a business as

usual outlook in the absence of any significant policy
changes, such as the introduction of carbon pricing.
Any eventual introduction of a carbon price would
adjust the relative prices of all fuels, reflecting their
different carbon intensities and, other things being
equal, influencing both the level of consumer demand
and the direction of supplier investment accordingly.
The strength of these influences, and overall impact on
gas demand, will be governed in substantial measure
by market responses to the carbon price level.
Global gas resources are sufficient to meet the
projected increase in global demand, provided that
the necessary investment in gas supply infrastructure
is made. Production is expected to become more
concentrated in the regions with large reserves, with
more than one-third of the projected growth to come
from the Middle East. Africa, Central Asia, Latin
America and the Russian Federation are also projected
to experience significant growth in production.
The share of gas produced from unconventional
gas sources is projected to rise, from around 12
per cent in 2007 to nearly 15 per cent in 2030.
Most of this increase is expected to come from the
United States. Output is also expected to increase
in China, India, Australia and Europe, although the

share of unconventional relative to conventional
gas production in these regions remains small.
The expected rise in unconventional gas sources
has implications for prices and energy security, as
well as energy trade. Increased unconventional gas
production in the United States to more than half of
its total gas production, for example, is reducing its
reliance on imports of LNG.
Trade is expected to rise more quickly than demand
(by 2.0 per cent per year over the period 20072030),
reflecting the imbalance between the location of
reserves and the sources of demand. Inter-regional
gas trade is projected to rise from 27 080 PJ (24 tcf)
in 2007 to 42 760 PJ (38 tcf) in 2030. Most of the
increase in inter-regional gas trade is in the form of
LNG, with its share of trade rising from 34 per cent in
2007 to 40 per cent in 2030. LNG trade is projected
to rise by 3.7 per cent per year to 17 104 PJ (15 tcf,
314 Mt) in 2030.
Globally, more than 400 million tonnes of additional
LNG capacity is either under construction, planned
or proposed (figure 4.14). However, it is unlikely that
many of these projects will proceed as proposed, at
least in the medium term. Australia accounts for a
significant share of the new capacity.
C H APTE R 4: GAS
350
Table 4.6 Australian conventional gas resources

represented as McKelvey classification estimates
as of 1 January 2009
300
Mpta
250
Conventional Gas Resources
200
150
100
50
0
Existing
Under construction
World
Planned/proposed
PJ
tcf
122 100
111
Resources
58 300
53
Inferred Resources
~22 000
~20
Total
202 400
184
Australia
AERA 4.14
Figure 4.14 World LNG export capacity, current and

proposed
Source: ABARE
Table 4.7 McKelvey classification estimates by basin

as at 1 January 2009
McKelvey
Class.
Basin
EDR
EDR
Gas
PJ
tcf
Carnarvon
81 400
74
Browse
18 700
17
EDR
Bonaparte
11 000
10
EDR
Gippsland
7 700
Australias identified conventional natural gas is a

major and growing energy resource with significant
potential for further discoveries.
EDR
Other
3 300
122 100
111
SDR
Carnarvon
22 000
20
Australias conventional gas resources at the

beginning of 2009 are presented in Table 4.6 under
the McKelvey classification of economic and subeconomic demonstrated resources (Geoscience
Australia 2009). Australia has around 180 400 PJ
(164 tcf) of gas, most of which are considered as
EDR. These resources are located across fourteen
basins, but nearly all (92 per cent) lie in the offshore
basins along the north-west margin of Western
Australia (figure 4.15), a geological region known as
the North West Shelf (Purcell and Purcell 1988) the
Bonaparte, Browse and Carnarvon basins (table 4.7).
Similarly, the bulk of this amount is in ten super-giant
fields, although a total of 590 fields are included in
the EDR and SDR compilation.
SDR
Browse
17 600
16
SDR
Bonaparte
15 400
14
SDR
Gippsland
1 100
SDR
Other
2 200
58 300
53
180 400
164
4.3 Australias gas resources

and market
4.3.1 Conventional gas resources
In addition to these demonstrated Australian

conventional gas resources (EDR and SDR), another
22 000 PJ (20 tcf) are estimated to be in the
inferred category, arising from recent discoveries
and previous finds that require further appraisal.
Geologically these world class gas resources
are related to the major delta systems that were
deposited along the north-west margin during
the Triassic and Jurassic periods as a prelude to
Australias separation from Gondwana. The gas is
contained in Mesozoic sandstone reservoirs and
largely sourced from Triassic and Jurassic coaly
sediments. Marine Cretaceous shales provide the
regional seal for fault block and other traps.
The offshore Gippsland Basin in south-eastern
Australia still has significant reserves after 40 years
Total EDR
Total SDR
Total (EDR + SDR)
of production but onshore basins only account for

2 per cent of Australias remaining resources (figure
4.15). Gas accumulations in the Gippsland, Bass
and Otway basins in Bass Strait are trapped in some
of Australias youngest petroleum reservoirs (Late
Cretaceous to Paleogene sandstones) while onshore
are some of the oldest (Ordovician sandstones in the
Amadeus Basin, Permian sandstones in the Cooper
Basin). Boreham et al. (2001) provide a detailed
discussion of the origin and distribution of Australias
conventional gas resources.
Development of two of the largest of the giant
undeveloped fields in the basins off the northwest
margin, the Io-Jansz and Gorgon fields (table 4.8),
has recently been announced, with the first gas from
the Gorgon project expected in 2015.
Resource growth
Australias identified conventional gas resources have
grown substantially since the discovery of the super
giant and giant gas fields along the North West Shelf
in the early 1970s. Gas EDR has increased more
95
than fourfold over the past 30 years. Even so, many

offshore gas discoveries have remained subeconomic
until recently and are only now being considered for
development. For example, the Ichthys field in the
Browse Basin, which adds significantly to Australias
reserves of both gas and condensate (12.8 tcf,
527mmbbls), was determined to be uneconomic
when first drilled in 1980, not least because of its
remote location. The big step in the gas EDR in
2008 (figure 4.16) reflects the promotion of large
accumulations such as Ichthys and Wheatstone into
this category.
Australias conventional gas resources have mostly
been discovered during the search for oil and have
occurred continuously but at irregular intervals and
include a number of super-giant fields (figure 4.17;
Powell 2004). However, from the late 1990s there
has been exploration aimed specifically at large gas
fields in the deeper water areas of the Carnarvon
Basin, which has met with considerable success,
including the discovery of Io-Jansz in 2000, one of
Australias largest gas accumulations.
120
Resource life
The gas resource to production ratio (R/P ratio) is a
measure of the remaining years of production from
current economic demonstrated resources (EDR)
at current production levels. Since production was
established and stabilised in the mid-1970s the EDR
to production ratio has fluctuated between 20 and 80
years, boosted by the major discoveries in the 1980s
and in the past 10 years (figures 4.17 and 4.18).
In 2008 at current levels of production, Australia had
63 years of conventional gas remaining.
The plot of gas discoveries by year against cumulative
volume discovered shows a strong record of discovery
and addition of new resources (figure 4.17).
4.3.2 Coal seam gas (CSG) resources

Australias identified CSG resources have grown
substantially in recent years. As at December 2008,
the economic demonstrated resources of CSG in
Australia were 16 590 PJ (15.1 tcf; table 4.9). In
2008, CSG accounted for about 12 per cent of the
total gas EDR in Australia. Reserve life is more than
130
140
150
BONAPARTE BASIN
Produced: 647
Remaining: 26 119
750 km 10
DARWIN
96
BROWSE BASIN
Produced: 0
Remaining: 36 945
CANNING BASIN
Produced: 0
Remaining: 7
CARNARVON BASIN
Produced: 14 388
Remaining: 103 846
20
AMADEUS BASIN
Produced: 410
Remaining: 339
ADAVALE BASIN
Produced: 9
Remaining: 0
BOWEN/SURAT BASINS
Produced: 934
Remaining: 477
COOPER/EROMANGA/
WARBURTON BASINS
Produced: 6549
Remaining: 911
PERTH BASIN
Produced: 709
Remaining: 889
BRISBANE
GUNNEDAH BASIN
Produced: 2
Remaining: 12
PERTH
SYDNEY
ADELAIDE
MELBOURNE
OTWAY BASIN
Conventional gas
as at 2008 in PJ
calculated as at 2008 in PJ
Gas basin
Produced: 484
Remaining: 1889
Gas pipeline
Gas pipeline
(proposed)
Gas processing
plant
30
GIPPSLAND BASIN
Produced: 8216
Remaining: 8641
BASS BASIN
Produced: 47
Remaining: 528
HOBART
40
AERA 4.15
Figure 4.15 Australias conventional gas resources, proven gas basins and gas infrastructure
C H APTE R 4: GAS
35
200
25
150
20
100
15
10
50
5
0
0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Year
Cumulative volume
discovered (tcf)
Number of
gas discoveries
AERA 4.17
Figure 4.17 Gas volumes discovered and number of

discoveries by year, 19602008
120
200 000
180 000
Gas resources (EDR + SDR)
160 000
100
Gas EDR
Years remaining
140 000
Energy in PJ
30
Number of gas discoveries
Queensland has 15 714 PJ (or 95 per cent) of the

reserves with the remaining 887 PJ in New South
Wales. Nearly all current reserves are contained in the
Surat (61 per cent) and Bowen (34 per cent) basins
with small amounts in the Clarence-Moreton (2 per
cent), Gunnedah (2 per cent), Gloucester and Sydney
basins (figures 4.19 and 4.20). The CSG productive
coal measures are of Permian (Bowen, Gunnedah,
Sydney and Gloucester basins) and Jurassic (Walloon
Coal Measures of the Surat and Clarence-Moreton
40
250
Cumulative volume discovered (tcf)
100 years at current rates of production. In addition

to EDR Australia has substantial subeconomic
demonstrated resources (nearly double the EDR) and
very large inferred CSG resources. There are even
larger estimates of in-ground potential CSG resources,
potentially in excess of 250 tcf (275000 PJ) (Baker
and Slater 2009; Santos 2009).
120 000
100 000
80 000
60 000
40 000
80
60
40
20
20 000
AERA 4.16
0
1968
1976
1984
1992
2000
AERA 4.18
0
1980
2008
Year
1985
1990
1995
2000
2005 2008
Year
Figure 4.16 Australias demonstrated conventional gas

resources 19642008
Figure 4.18 Conventional gas EDR to production in years

of remaining production, 19782008
Table 4.8 Major gas fields: development status

Field
Basin
Gas
Resources
tcf
Condensate
Resources
mmbbl
Total
Resources
PJ
Status
Carnarvon
>40
>44 000
under
construction
Ichthys
Browse
12.8
527
17 137
FEED
Woodside Browse project, including Torosa,

Brecknock and Calliance
Browse
14
370
17 546
undeveloped
Greater Sunrise (including Sunrise and

Troubadour)
Bonaparte
7.7
8470
undeveloped
Evans Shoal
Bonaparte
6.6
7260
undeveloped
Scarborough
Carnarvon
5.2
5720
undeveloped
Pluto (including Xena)
Carnarvon
4.65
55.3
5436
under
construction
Wheatstone
Carnarvon
4400
FEED
Clio
Carnarvon
3.5
3850
undeveloped
Chandon
Carnarvon
3.5
3850
undeveloped
Browse
2.5
40
2982
undeveloped
Carnarvon
2-3
22003300
undeveloped
Browse
1.3
48
1708
under
construction
Greater Gorgon (including Gorgon, Io/Jansz,

Chrysaor, Dionysus, Tryal Rocks West, Spar,
Orthrus, Maenad, Geryon and Urania)
Prelude (including Concerto)

Thebe
Crux
Note: Data compiled from various public sources, including company reports to the Australian Securities Exchange
97
basins) age, although the Permian coals are of higher

rank, more laterally continuous and have greater gas
contents (Draper and Boreham 2006).
Over the past five years, CSG exploration has
increased substantially in Queensland and New South
Wales as a result of the successful development
of CSG production in Queensland. The search has
expanded beyond the high rank Permian coals
encouraged by the success in producing CSG from
low rank coals in the United States. These successes
have also stimulated exploration for CSG in South
Australia, Tasmania, Victoria and Western Australia.
Table 4.9 CSG Resources at December 2008
CSG Resources
PJ
tcf
Economic Demonstrated
Resources
16 590
15.1
Sub-economic
Demonstrated Resources
30 000
27.2
Inferred Resources
122 020
111
Total
168 610
153
98
During 200708 CSG activity in Queensland

continued at record levels with about 600 CSG
production and exploration wells drilled. Exploration
in Queensland continues to concentrate in the
Bowen, Galilee and Surat basins while in New
South Wales exploration continues in the Sydney,
Gunnedah, Gloucester and Clarence-Moreton
basins. All have 2P reserves. Other prospective
basins include the Pedirka, Murray, Perth, Ipswich,
Maryborough and Otway basins.
4.3.3 Tight gas, shale gas and

gas hydrates resources
Source: Geoscience Australia 2009; Queensland Department of

Mines and Energy 2009; subeconomic and inferred resources
compiled by Geoscience Australia from company reports and other
pubic domain information
120
Nonetheless, CSG exploration in Australia is still

relatively immature. The current high levels of
exploration are expected to add to known resources:
in the five years to 2008 2P reserves increased at
a rate of about 46 per cent per year, significantly
increasing resource life (figures 4.21 and 4.22).
130
Currently Australia has no reserves of tight gas, but

the in-place resources of tight gas are estimated
at around 22 000 PJ (20 tcf). The largest known
resources of tight gas are in low permeability
sandstone reservoirs in the Perth, Cooper and
Gippsland basins (figure 4.23). The Perth Basin is
140
150
DARWIN
750 km
10
20
BOWEN BASIN
SURAT BASIN
Coal Seam Gas 5441
Coal Seam Gas 10 273
BRISBANE
CLARENCEMORETON BASIN
Coal Seam Gas 298
GUNNEDAH BASIN
Coal Seam Gas 336
GLOUCESTER BASIN
PERTH
SYDNEY BASIN
Coal Seam Gas 67
ADELAIDE
Coal Seam Gas 176
30
SYDNEY
MELBOURNE
Coal seam gas

Coal seam gas basin
Coal seam gas EDR as
at 2008 in PJ
Gas pipeline
HOBART
40

AERA 4.19
Figure 4.19 Location of Australias coal seam gas reserves and gas infrastructure
C H APTE R 4: GAS
estimated to contain about 11 000 PJ (10 tcf) of

tight gas, the Cooper Basin to contain about 8800 PJ
(8 tcf) (Campbell 2009) and the Gippsland Basin is
considered to contain approximately 2200 PJ (2 tcf)
of tight gas (Lakes Oil 2009).
Gunnedah Basin 2%
Tight gas resources in these established conventional

gas producing basins are located relatively close to
infrastructure and are currently being considered for
commercial production. Other occurrences of tight
gas have been identified in more remote onshore
basins and offshore. In general, Australian tight
gas reservoirs are sandstones from a wide range of
geological ages with low permeability due to primary
lithology or later cementation.
No definitive gas hydrates have been identified in

Australian waters. The occurrence of gas hydrate was
inferred from the presence of biogenic methane in
sediments cored in the Timor Trough during the Deep
Sea Drilling Program (DSDP 262) (McKirdy and Cook
1980) but to date none have been recovered around
Australia. Bottom simulating reflectors (BSRs) that
are considered as possible indicators of gas hydrates
have been observed from seismic records in deep
water at various locations around Australia. However,
further investigations are yet to confirm the presence
of gas hydrates. Anomalous pore water chemistry can
also indicate gas hydrates and has been observed
in several offshore Ocean Drilling Program drill cores
(ODP 1127, 1129, 1131) (Swart et al. 2000) from the
Eyre Terrace in the Great Australian Bight (figure 4.23).
Bowen Basin
34%
Surat Basin
61%
AERA 4.20
Figure 4.20 CSG EDR by basin, 2008

18 000
16 000
CSG reserves
14 000
12 000
PJ
Shale gas exploration is in its infancy in Australia, but

the organic rich shales in some onshore basins have
been assessed for their shale gas potential (Vu et al.
2009). Lower Paleozoic and Proterozoic shales within
the Georgina and McArthur basins in the Northern
Territory (figure 4.23) are likely candidates for
further investigation. Cost effective horizontal drilling
and hydraulic fracturing techniques are enabling
unconventional gas resources to be assessed.
Gloucester Basin 1%
Sydney Basin 0.4%
Clarence-Moreton Basin 2%
10 000
8000
99
6000
4000
2000
AERA 4.21
0
1996
1998
2000
2002
2004
2006
2008
Year
Figure 4.21 CSG 2P reserves since 1996

Source: Queensland Department of Mines and Energy 2009;
4.3.4 Total gas resources

140
160
Production (PJ)
120
Resource life (years)
100
80
80
60
60
40
40
20
20
AERA 4.22
0
1996
The gas resource pyramid (figure 4.24) depicts these

varying types of natural gas resources. A smaller
volume of conventional gas and CSG identified
reserves are underpinned by larger volumes of
unconventional gas inferred and potential resources.
120
140
100
PJ
Australia has large and growing gas resources.

CSG EDR represent only a tenth of the conventional
gas EDR. However, the total identified resources
for CSG are significantly larger than EDR (table
4.10). The potential in-ground CSG resource is,
by some industry estimates, up to three times the
undiscovered volumes in the proven gas basins
(table 4.10; figure 4.24). Australias combined
identified gas resources are in the order of 393 000
PJ (357 tcf), equal to around 180 years at current
production rates.
1998
2000
2002
2004
2006
2008
Year
Figure 4.22 CSG resource life and production since

1996
Source: Queensland Department of Mines and Energy 2009;
120
DSDP 262
130
140
150
10
DARWIN
McARTHUR
BASIN
750 km
GEORGINA
BASIN
20
Moomba
Big Lake
BRISBANE
Warro
PERTH
BASIN
30
PERTH
ODP 1127A
ODP 1129A
ODP 1131A
Whicher Range
SYDNEY
ADELAIDE
MELBOURNE
Tight Gas, Shale Gas and Gas Hydrate

Gas basin
Gas pipeline
Wombat
GIPPSLAND
BASIN
Gas field location

Well location
40
HOBART
AERA 4.23
100
Figure 4.23 Tight gas, shale gas and gas hydrate resource locations and gas infrastructure
The estimated undiscovered conventional gas

resources of varying uncertainties can also be
mapped to the resource pyramid.
As the unconventional gas industry in Australia
matures, it is expected that exploration will add to
the inventory and that more of the CSG resources
will move into the reserves category. CSG reserves
are typically based on estimates of gas in place
and a recovery factor once production has been
established (Kimber and Moran 2004). Consequently
the development of CSG will add to conventional gas
resources to support domestic use, particularly in
eastern Australia, and potentially for export.
4.3.5 Gas market

Conventional gas production
Conventional gas production has increased strongly
over the last 20 years, with a major contributor being
the North West Shelf LNG project in the Carnarvon
Basin (figure 4.25). In 2008 conventional gas
production was some 1930 PJ (1.75 tcf) and came
from ten producing basins, with the Carnarvon Basin
dominating (table 4.11). Next ranked is the Gippsland
Basin, followed by the Bonaparte Basin.
Gas production as shown in Table 4.11 includes

production from Bayu-Undan, a giant field located in
the Bonaparte Basin, some 500 km north-west of
Darwin in the Timor Sea Joint Petroleum Development
Area (JPDA) shared by Australia and Timor Leste.
Increased breakeven
price required
Smaller volumes,
easy to develop
Larger volumes,
difficult to
develop
requirements
EDR + SDR
164 tcf
Conventional gas
42 tcf CSG
Inferred resources
111 tcf - CSG
20 tcf - tight gas
Potential resources
115+ tcf - conventional gas undiscovered
250+ tcf - CSG in ground
Unknown tcf - tight/shale gas in ground
AERA 4.24
Figure 4.24 Australian Gas Resource Pyramid (adapted

from McCabe 1998 and Branan 2008)
C H APTE R 4: GAS
Table 4.10 Total Australian gas resources

Resource Category
Conventional Gas
Coal Seam Gas
Tight Gas
Total Gas
PJ
tcf
PJ
tcf
PJ
tcf
PJ
tcf
EDR
122 100
111
16 590
15.1
138 690
126
SDR
58 300
53
30 000
27.2
88 300
80
Inferred
22 000
20
122 020
111.0
22 000
20
166 020
151
All identified resources
202 400
184
168 600
153
22 000
20
393 000
357
Potential in ground
resource
unknown
unknown
275 000
250
unknown
unknown
unknown
unknown
Undiscovered in four
proven basins
125 400
114
unknown
unknown
unknown
unknown
unknown
unknown
Undiscovered frontier
basins
unknown
unknown
unknown
unknown
unknown
unknown
unknown
unknown
Resources identified,
potential and undiscovered
327 800
298
443 600
403
22 000
20
793 400
721
Table 4.11 Australian conventional gas production

by basin for 2008, and cumulative production
2500
2000
PJ
1500
1000
500
0
1980
1985
1990
1995
Year
2000
2005
AERA 4.25
Figure 4.25 Australian conventional gas production

19782008
Basin
2008
PJ
Total
PJ
Carnarvon
1048
14 388
Gippsland
324
8216
Bonaparte
175
647
Otway
147
484
Cooper/
Eromanga
140
6542
Bowen/Surat
41
934
Amadeus
22
410
Bass
17
47
Perth
10
709
Warburton
Gunnedah
Adavale
Total
1930
32 394
Note: Includes imports from JPDA

Geoscience Australia production and reserve data

for Bayu-Undan includes all production and reserves,
rather than only Australias 10 per cent share of
royalties from the JPDA (chapter 2; box 2.2).
supplies Darwin with gas. Gas production from a

single field in the Adavale Basin, Gilmore, ceased
after 2002. Conventional gas production in all basins,
other than the Carnarvon and Bonaparte basins, is
directed solely to domestic consumption.
Australias past conventional gas production has

been overwhelmingly from the Carnarvon, Cooper
and Gippsland basins with smaller contributions from
the Perth, Bonaparte, Bowen, Amadeus, Otway and
Surat basins (table 4.11). Now that conventional
gas production from the Cooper Basin is in decline,
more than 80 per cent of production is from the three
main offshore basins (Carnarvon, Gippsland and
Bonaparte basins). Most (54 per cent) is from the
Carnarvon Basin which contains the giant Goodwyn,
North Rankin and Perseus accumulations that form
part of the North West Shelf Venture Project. There
is also production from the Perth, Bowen/Surat and
Otway Basins, as well as the Amadeus Basin which
Over the past four years, new fields have been

developed in the Carnarvon, Otway, Bass and Gippsland
basins. In 2008, these fields produced in excess
of 188 PJ accounting for 10 per cent of Australias
conventional natural gas production (table 4.12).
Unconventional gas production

Separate commercial production of CSG is relatively
new, beginning in the United States in the 1970s.
Exploration for CSG in Australia began in 1976.
In February 1996 the first commercial coal mine
methane (CMM) operation commenced at the Moura
mine in Queensland methane drainage project (then
101
owned by BHP Mitsui Coal Pty Ltd). In the same year,

at the Appin and Tower underground mines (then
owned by BHP Ltd), a CMM operation was used to
fuel on-site generator sets (gas-fired power stations).
The first stand-alone commercial production of CSG
in Australia commenced in December 1996 at the
Dawson Valley project (then owned by Conoco),
adjoining the Moura coal mine.
Australias annual CSG production has increased from
1 PJ in 1996 to 139 PJ in 2008, around 7 per cent
of Australias total gas production. In the five years to
2008 production increased by 32per cent per year.
Of the 2008 production of CSG, Queensland produced
133.2 PJ (or 96 per cent) from the Bowen (93 PJ) and
Surat (40 PJ) basins. In New South Wales 5.3PJ was
produced from the Sydney Basin.
Tight gas is not currently produced in Australia.

However, there are several planned projects for
commercial production of tight gas, notably in the
Perth Basin in Western Australia. There is also no
production of shale gas or from gas hydrates.
100
75
The manufacturing, electricity generation, mining and

residential sectors are the major consumers of gas.
The manufacturing sector is the largest consumer
of gas and is comprised of a few large consumers,
including metal product industries (mainly smelting and
refining activities), the chemical industry (fertilisers
and plastics), and the cement industry.
The share of gas-fired electricity has increased
in recent years, reflecting market reforms and an
increase in gas availability. Gas accounted for an
estimated 16 per cent of electricity generation
in 200708. The strong share of the mining
sector is attributable to the use of natural gas in
the production of LNG. The residential sector is
characterised by a large number of small scale
consumers. The major residential uses of gas include
water heating, space heating and cooking.
Gas trade
Until 198990, Australia consumed all of the natural
gas that was produced domestically. Following the
development of the North West Shelf Venture, gas,
in the form of LNG, was exported to overseas
markets. Nearly half of Australias gas production
(currently sourced from offshore basins in Western
25
1200
1000
20
800
15
10
Gas is the third largest contributor to Australias primary

energy consumption after coal and oil. In 200708,
gas accounted for 22 per cent of Australias total
energy consumption. Australias primary gas
consumption increased from 74 PJ in 197071 to
1249 PJ in 200708 an average rate of growth of
7.9 per cent per year (figure 4.27). The robust growth
in gas consumption over this period mainly reflects
sustained population growth and strong economic
growth, as well as its competitiveness and government
policies to support its uptake.
PJ
125
PJ
102
In 200708, CSG accounted for around 10 per cent

of total gas consumption in Australia (figure 4.26)
and 80per cent in Queensland. The rapid growth
of the CSG industry has been underpinned by the
strong demand growth in the Eastern gas market
and the recent recognition of the large size of the
coal seam gas resource (table 4.13). The strong
growth in CSG production reflects the Queensland
Governments energy and greenhouse gas reduction
policies, in particular the requirement that 13 per cent
of grid connected power generation in the State be
gas fired by 2005 (Baker and Slater 2009). Recent
improvements in extraction technology have also
supported the growth in CSG production.
Total gas consumption
600
50
10
400
25
0
1995-96 1997-98 1999-00 2001-02 2003-04 2005-06 2007-08
Year
200
AERA 4.27
1971-72
1977-78
1983-84
AERA 4.26
1989-90
Year
1995-96
2001-02
CSG production (PJ)
Natural gas consumption (PJ)
Share of total gas consumption (%)
Share of total energy consumption (%)
0
2007-08
Figure 4.26 Australian CSG production and share of

total gas consumption
Figure 4.27 Australian gas consumption and share of

total primary energy consumption
Source: Geoscience Australia, ABARE 2009a
Source: ABARE 2009a
C H APTE R 4: GAS
Australia and the Northern Territory) is now exported.

In 200708, the volume of LNG exports was 14.3 Mt
(787 PJ), valued at $5.9 billion. In 200809 higher
export volumes and international oil prices led to an
increase in exports to $10.1 billion (ABARE 2009b).
Australia accounts for 17 per cent of Japans LNG total

imports and 81 per cent of Chinas LNG imports.
There are also plans to export CSG in the form
of LNG from Queensland. Increased international
LNG prices together with rapidly expanding CSG
reserves in Queensland have recently improved the
economics of developing LNG export facilities in
eastern Australia. There are at least five planned LNG
projects in Queensland with a combined capacity of
Japan is Australias major export market for LNG,

followed by China, the Republic of Korea and India
(figure 4.28). In 2008, Japan accounted for more than
three-quarters of Australias LNG exports. In contrast,
Table 4.12 Conventional gas projects recently completed, as at October 2009

Project
Company
Basin
Start up
Capacity
(PJ pa)
2008
production
John Brookes
Santos
Carnarvon
2005
58
61
Minerva
BHP Billiton
Otway
2005
55
32
Bassgas
Origin
Bass
2006
20
17
Casino
Santos
Otway
2006
33
34
Otway
Woodside
Otway
2007
60
44
Angel
Woodside
Carnarvon
2008
310
na
Blacktip
ENI Australia
Bonaparte
2009
44
na
Source: ABARE
16
Project
Company
Location
Berwyndale South
CSM
Queensland Gas
Company
Roma, Qld
Argyle
Queensland Gas
Company
Roma, Qld
Spring Gully CSM

project (phase 4)
Origin Energy
Roma, Qld
Tipton West CSM

project
Arrow Energy/Beach
Petroleum/Australian
Pipeline Trust
Dalby, Qld
Darling Downs
development
APLNG (Origin/
ConocoPhillips)
North of Roma, Qld
Start up
12
2006
Capacity
(PJ pa)
Capital
Expenditure
na
$52 m
Volume (Mt)
Mt
Value (A$ billion)

8
2007
7.4
$100 m
2007
15
$114 m
2007
10
$119 m
2007-08 A$ billion
Table 4.13 CSG projects recently completed, as at October 2009 a) Export volume and value
0
1989-902009
1992-93
1995-96
1998-99 2001-02 $500

2004-05
44
m 2007-08
Year
(includes
wells
from Tallinga)
Source: ABARE 2009c
a) Export volume and value
Volume (Mt)
12
Mt
0
1992-93
1995-96
India 1%
Value (A$ billion)
1989-90
b) LNG exports by destination
1998-99
2001-02
2004-05
2007-08 A$ billion
16
Republic of
Korea 3%
China 18%
Japan 78%
2007-08
Year
Figure 4.28 Australian LNG exports

b) LNG exports by destination
Source: ABARE 2009b, d
Republic of
Korea 3%
China 18%
AERA 4.28
India 1%
103
2000
1500
PJ
around 35 Mt, and potentially up to 57 Mt (ABARE

2009c). This is equivalent to the existing LNG
production capacity and that under construction from
conventional gas located off the north-west coast
of Australia.
1000
Gas supply-demand balance

The supply-demand balance presented in figure 4.29
and table 4.14 incorporates production, domestic
consumption and trade (exports). It highlights steady
growth in domestic consumption, the boost in production
with LNG exports and the emerging impact of CSG.
500
0
1970-71
1984-85
1991-92
120
Total production
Consumption
AERA 4.29
Figure 4.29 Australias gas supply-demand balance

Note: Conventional production includes imports from JPDA.
Adjusted for stock changes and statistical discrepancy
Source: ABARE 2009a
130
140
150
DARWIN
104
2005-06
Conventional production
Exports
The Australian domestic gas market consists of

three distinct regional markets: the Eastern market
(Queensland, New South Wales, Australian Capital
Territory, Victoria, South Australia and Tasmania); the
Western market (Western Australia) and the Northern
market (Northern Territory) (figure 4.30). These
markets are geographically isolated from one another,
making transmission and distribution of gas between
markets uneconomic at present. As a result, all gas
production is either consumed within each market or
exported as LNG.
1998-99
Year
Regional gas markets
110
1977-78
750 km
10
Northern
Gas
Market
20
Western
Gas
Market
Eastern
Gas
Market
BRISBANE
30
PERTH
ADELAIDE
SYDNEY
MELBOURNE
40
Gas basin
Gas pipeline
HOBART

AERA 4.30
Figure 4.30 Australias gas facilities

500
PJ
700
600
300
500
PJ
400
C H APTE R 4: GAS
200
a) Eastern gas market
400
800
100
300
700
0
200
6001970-71
PJ
0
600
300
1984-85
1991-92
1998-99
1970-71
100
200
1200
0
1998-99
2005-06
1998-99
2005-06
2005-06
1977-78
1984-85
1991-92
Year
b) Western gas market
100001970-71
1970-71
800
1200
1991-92
Year
Year
200
400
PJ
1000
This market has traditionally been the largest

consumer of natural gas in Australia, accounting
for
800
around 57 per cent of Australian gas consumption
in 200708. Over the period 197071 600
to 200708,
consumption in the region increased at400
an annual
average rate of 6.3 per cent. Since 197071, the
200 the gas
Eastern gas market has consumed all of
produced in the region (figure 4.31, panel a). The
0
electricity generation and residential sectors
are the
1970-71
1977-78
largest consumers of gas in the Eastern market.
PJ PJ
PJ
The Eastern gas market accounts for around

100
35per cent of Australias gas production.
It is the
0
400
1200
700
only region where coal seam gas supplements
1970-71
1977-78
1984-85
300
600
conventional gas supplies (mainly in Queensland),
1000
200
accounting for nearly one fifth of total gas production
500
800
1200
100
in the region.
400
1977-78
500 a) Eastern gas market

800
1977-78
1984-85
1991-92
1984-85 Year
1991-92
1977-78

c) Northern gas market
600
250
1000
1984-85
1991-92
Year
400
200
800
1998-99
1998-99
2005-06
1998-99
2005-06
1998-99
2005-06
1998-99
2005-06
1998-99
2005-06
Year
2005-06
PJ PJ
1970-71
1977-78
200
150
600
0
400
1001970-71
1977-78
1984-85
1991-92
Year
200
50 c) Northern gas market
250
0
1977-78
1984-85
1991-92
01970-71
200
1970-71
1977-78
1984-85 Year
1991-92
PJ
The Western gas market accounts for around

57
250
per cent of Australias gas production. The region is
also a large consumer of gas, accounting
200 for around
41 per cent of Australias gas consumption. The
electricity generation and manufacturing150sectors
account for the majority of gas consumption in the
100 Western
Western gas market. From 198990, the
gas market produced significantly more gas than
50
it consumed (figure 4.31, panel b), following
the
development of the North West Shelf Venture and the
0
establishment of long term export LNG contracts.
PJ
150
250
1984-85
100
200

Consumption
1991-92
1998-99
Year
2005-06
Total production
PJ
Year
Exports
The Northern gas market is the smallest producer
AERA 4.31
50
and consumer of gas in Australia, accounting for
150
Consumption
8 per cent and 3 per cent of Australias gas
Total production
1000
production and consumption in 200708,
Exports
1970-71
1977-78
1984-85AERA 4.31
1991-92
1998-99
2005-06
respectively. Production began in the Northern gas
Year
50
market in the early 1980s through the development
of the onshore Amadeus Basin. In 200506,
Consumption
0
production in the region increased significantly with
Total production
1970-71
1977-78
1984-85
1991-92
1998-99
2005-06
Exports
the development of the BayuUndan field in the
AERA 4.31
Year
offshore Bonaparte Basin. Electricity generation
Figure 4.31 Regional gas market supply-demand balances
and mining account for the majority of gas use in
Conventional
Note: conventionalConsumption
production includes imports
from JPDA,production
the Northern gas market. Until 200506, all of the
stock changes and statistical discrepancy
Total production
Exports
gas produced in the region was consumed locally.
Source: ABARE 2009a
AERA 4.31
Table 4.14 Australian gas supply-demand balance, 200708

Unit
Eastern gas
market
Western gas
market
Northern gas
marketa
Australia
Conventional gasb
PJ
589
1179
175
1942
Coal seam gas
PJ
124
124
Total
PJ
713
1179
175
2066
Share of total
35
57
100
Total
PJ
713
516
33
1262
Share of total
57
41
100
Total
PJ
663
141
804
Share of total
82
18
100
Production
Primary gas consumption
LNG Exportsc
a Production includes imports from the JPDA in the Timor Sea. b Conventional production includes stock changes and statistical discrepancies.
c ABARE estimate
Note: Australian totals may not match those in Table 4.1 due to statistical discrepancies between state and national data

Source: ABARE 2009a
105
106
Following the development of the Darwin LNG plant,

gas has also been exported as LNG (figure 4.31,
panel c). In September 2009, the offshore Blacktip
gas field in the Petrel Sub-basin of the Bonaparte
Basin, came on stream with gas being piped onshore
to a processing plant at Wadeye and then to the
Amadeus Basin-Darwin pipeline.
price of coal (a major competitor for use in electricity

generation).

the development of higher cost sources of gas

(for example coal seam gas);
The outlook to 2030 is expected to see the continued

growth in the use of gas in the Australian energy
mix and increasing LNG exports to meet growing
global demand. In the latest ABARE long-term energy
projections which incorporate the Renewable Energy
Target, a 5 per cent emissions reduction target and
other existing policies, gas is expected to increase
its share of primary energy consumption to around
33 per cent (2575PJ) in 202930, and account
for 37 per cent of Australias electricity generation
(ABARE 2010). LNG exports are also projected to rise
strongly to 5930PJ (5 tcf) in 202930. Australias
existing resources are sufficient to meet these
projected increases in domestic and export demand
over the period to 2030. There is also scope for
Australias resources to expand further, with major
new discoveries of conventional gas in offshore
basins and the re-evaluation of the large CSG
potential resources leading to their reclassification
into the EDR category.

Broader economic, social and environmental
considerations aside, the main factors impacting
on the outlook for gas are prices, the geological
characteristics of the resource (such as location,
depth, quality), developments in technology,
infrastructure issues, and local environmental
considerations.
Gas prices
The future price of gas is one of the main factors
affecting both exploration and development of the
resource. Australian gas producers have typically
faced different prices for domestic and export gas.
Domestic prices have historically been much lower
than international prices, although domestic gas
prices have been rising in recent years.
For the domestic market, Australia provides some
of the lowest cost gas in the world. These low gas
prices are generally the result of mature long term
contracts out of the Cooper and Gippsland basins
and the North West Shelf fields (table 4.15).
Australian gas prices have historically been relatively
stable because of provisions in long term contracts
that include a defined base price that is periodically
adjusted to reflect changes in an index such as the
CPI. In addition, prices have been capped by the
Domestic gas prices have increased over the past few

years in response to a number of factors including:
sustained pressure on exploration and
development costs, that have increased the cost
of development;
the anticipated implementation of an emissions

reduction target that will make gas a more
valuable commodity (there is some evidence that
this is being factored into contracts);
strong coal prices that have been increasing
rapidly (and remain high historically despite the
drop in late 2008 and early 2009) and raising the
cap on gas prices; and
high oil prices that have flowed through to
Australian LNG contracts and accentuated the
gap between domestic and international (netback)
prices. This has encouraged companies to put
their efforts into developing projects destined for
export rather than domestic demand.
Except for Victoria, there is currently no formal
exchange for trading natural gas in Australia. In all
jurisdictions except Victoria, wholesale gas trading
occurs through private negotiations between buyers
and sellers. The terms, quantities and prices
are confidential and can vary significantly across
contracts. Typically these contracts contain take-orpay components where shippers agree to pay for a
specified quantity of gas, regardless of whether they
are able to on-sell it.
LNG contracts generally have a price component
linked to world energy prices (typically crude oil) and
also include the cost of processing and transport.
Typically, LNG must travel large distances to markets.
LNG transport costs are distance and time sensitive
and, as such, can account for a significant proportion
of overall LNG costs.
There have been three reasonably distinct markets
for LNG, each with its own pricing structure. In the
United States, pipeline natural gas prices have
been used as the basis for setting the price of LNG.
The benchmark price is either a specified market
in long-term contracts or the Henry Hub price for
short-term sales. In Europe, LNG prices are related
to competing fuel prices, such as low-sulphur residual
fuel oil, although LNG is now starting to be linked to
natural gas spot and futures market prices. In the
Asia Pacific region, Japanese crude oil prices have
historically been used as the basis for setting the
price of LNG under long term contracts. Asian prices
are generally higher than prices elsewhere in the
world. While still distinct, the markets are becoming
C H APTE R 4: GAS
more interconnected, not least because of the rapid

growth in Middle East LNG supply to both regions
(IEA 2008).
Over the long term, LNG prices are assumed to
follow a similar trajectory to oil prices, reflecting
an assumed continuation of the established
relationship between oil prices and long-term LNG
supply contracts through indexation, and substitution
possibilities in electricity generation and end use
sectors (ABARE 2010). In its 2009 World Energy
Outlook, the IEA flags a potential relaxation of this
relationship as significant new gas supplies come on
line, thus placing some downward pressure on prices.
However, indexation will still remain dominant in the
Asia Pacific region, where most of Australias gas
trade will continue to occur (IEA 2009c).
At the domestic level, the Australian Energy Regulator
also points to a number of factors in the east coast
market that may reduce upward pressure on gas
prices (AER 2009). These include the substantial
volumes of ramp up gas that are likely to be
produced in the lead-up to the commissioning of
CSG-LNG projects, the large number of gas basins
ensuring diversity of supply, relatively low barriers to
entry, and an extensive gas transmission network
linking producing basins (ABARE 2010).
Resource characteristics
The decision to develop a gas field also depends on
its characteristics. They include its size, location and
distance from markets and infrastructure; its depth
(in the case of offshore fields); and the quality of the
gas, such as CO2 content and presence of natural
gas liquids. Table 4.16 lists these characteristics for
a number of Australian conventional gas fields.
Resource characteristics influencing the development
of unconventional gas resources partly diverge from
those relevant to conventional gas fields. Location
and size of accumulation remain important but there
are no associated hydrocarbon liquids with CSG.
As all current identified unconventional resources
in Australia are onshore, distance to market and
infrastructure are key location factors.
The geological factors which influence CSG resource
quality include tectonic and structural setting,
depositional environment, coal rank and gas
generation, gas content, permeability and
Box 4.3: Geology of Australias major

conventional gas fields
Australias identified and potential gas resources
occur within a large number of sedimentary
basins (Boreham et al. 2001) that stretch across
the continent and its vast marine jurisdiction.
Identified conventional gas resources are
predominantly located in offshore basins along
the north-west margin. Much of the undeveloped
resource and the undiscovered potential is
in deep water (figures 4.32 and 4.33; see
discussion below). The gas habitat includes:
Large fault block traps, Triassic to Jurassic
sandstone reservoirs sealed by Cretaceous
shales and sourced from Triassic coaly
sediments (e.g. North Rankin, Gorgon)
Drape anticlines and structural/stratigraphic
traps related to Late Jurassic and Early
Cretaceous sand bodies (e.g. Io-Jansz,
Scarborough; figure 4.32)
Low relief anticlines with Permian sandstone
reservoirs (e.g. Petrel; figure 4.33).
In the Bass Strait basins (Otway, Bass and
Gippsland) along the south-east margin,
conventional gas accumulations are contained
in Late Cretaceous to Paleogene sandstone
reservoirs in anticlinal, fault block and
structural/stratigraphic traps. In addition there
are known gas resources in a number of onshore
basins usually in Paleozoic sandstone reservoirs
in structural traps.
hydrogeology. Draper and Boreham (2006) concluded

that, for Queensland GSG, neither rank nor gas
content was critical, but rather permeability and
hence deliverability, with structural setting being a
strong determinant of permeability. For shale gas,
resource quality is dependent on gas yield which is
controlled by organic matter content, maturity and
permeability, particularly that provided by natural
fracture networks. Reservoir performance (porosity
and permeability) is the primary determinant of
the quality of all gas resources and the point of
difference between conventional gas and tight gas.
Table 4.15 Australian gas prices (200809 dollars)
Natural Gasa $A/GJ

LNGb $A/t
LNGb $A/GJ
200102
200203
200304
200405
200506
200607
200708
200809
$2.16
$2.34
$2.50
$2.59
$2.71
$3.34
$3.72
$3.32
$428.17
$402.49
$324.32
$348.10
$401.94
$376.29
$428.63
$620.71
$7.87
$7.40
$5.96
$6.40
$7.39
$6.92
$7.88
$11.41
a Financial year average of daily spot prices in the Victorian gas market. b Export unit value
Sources: ABARE 2009d; AEMO 2009a
107
Table 4.16 Resource characteristics of selected Australian conventional gas fields

Basin/
discovery
date
Field
initial recoverable volumes
CO2%
water
depth
m
km to
landfall
status
~ 14 700
< 5%
122
130
export LNG
1989
gas tcf
liquids
mmbbl
Total PJ
12.28
203
Carnarvon
1971
North Rankin
1980
Gorgon
17.2
121
~ 19 630
> 10%
259
120
construction,
LNG 2015
1980
Scarborough
5.2
~ 5 720
< 5%
923
310
undeveloped
2006
Pluto
4.6
~ 5 060
< 5%
900
190
construction,
LNG 2011
1993
East Spar
0.25
14
~ 360
< 5%
98
100
domestic
production 1996
1980
Ichthys
12.8
527
~ 17 180
> 5%
256
220
FEED, LNG
2015
1971
Torosa
11.4
121
~ 13 250
> 5%
50
280
undeveloped
Browse
Note: Data compiled from various public sources, including companies reports to the Australian Securities Exchange
114
Gas field
Gas pipeline
Oil field
108
116
200
Bathymetry contour (depth in metres)
100 km
Angel
Goodwyn
Thebe
Wheatstone
Jansz
North
Rankin
20
Pluto
Scarborough
1000
DAMPIER
Gorgon
500
1000
East Spar
0
20
NT
WA
QLD
SA
ONSLOW
NSW
VIC
TAS
EXMOUTH
WESTERN AUSTRALIA
22
AERA 4.32
Field outlines are provided by GPinfo, an Encom Petroleum Information Pty Ltd product. Field outlines in GPinfo are sourced, where possible, from the operators of the fields only.
Outlines are updated at irregular intervals but with at least one major update per year.
Figure 4.32 Gas fields in the Carnarvon Basin
Source: Field outlines are provided by GPinfo, an Encom Petroleum Information Pty Ltd product. Field outlines in GPinfo are sourced,
where possible, from the operators of the fields only. Outlines are updated at irregular intervals but with at least one major update per year
C H APTE R 4: GAS
Location and depth

The location of the gas, onshore or offshore, in
shallow or deep water, also affects development
costs. Offshore development generally has higher
cost and risk than conventional onshore development
because of the specialised equipment required for
exploration, development and production.
The Australian gas industr y has moved from the
development of fields in shallow water (Gippsland
Basin) and near shore (Carnar von Basin) that have a
low marginal cost to fields in deeper water that have
higher marginal costs.
In the Carnar von Basin, the Goodwyn gas field in
125 m of water is currently Australias deepest
producing gas field, although Ichthys, Pluto and
some fields linked into the Greater Gorgon Project
will be in water depths of several hundred metres or
more (figure 4.32; table 4.16) and gas exploration
on the Exmouth Plateau now routinely targets
prospects in water depths beyond 1000 m (Walker
2007). These projects have higher technological and

economic risks and costs compared with onshore
developments (Hogan et al. 1996). A number of
large gas accumulations in deep water remain to
be developed (for example Scarborough) whereas
smaller accumulations in shallower water have been
developed (figure 4.32).
Although the new CSG and the embryonic tight gas
industries in Australia are onshore activities, they
carry technological risks comparable to deepwater
conventional gas developments. The Whicher Range
tight gas field discovered in 1969 in the onshore
southern Perth Basin, for example, has a history of
unsuccessful attempts using the then latest drilling
technology to commercially produce a multi-tcf inground resource (Frith 2004).
Co-location with other resources

A resource that contains only gas can be left
undeveloped until market conditions warrant its
development. However, gas rich in condensate or
TIMOR
LESTE
NT
WA
QLD
SA
NSW
VIC
IN
N
DO
ES
INDONESIA
AUSTRALIA
IA
Greater
Sunrise
Evans Shoal
10
109
200 km
TAS
Bayu/Undan
0
300 00
20
DARWIN
500
1000
Petrel
0
20
Blacktip
Ichthys
WADEYE
Torosa
Brecknock
15
Calliance
WESTERN AUSTRALIA
Gas field
Oil field
125
NORTHERN
TERRITORY
Gas pipeline
Scheduled area boundary (OPGGSA 2006)
200
Bathymetry contour (depth in metres)

130
AERA 4.33
Field outlines are provided by GPinfo, an Encom Petroleum Information Pty Ltd product. Field outlines in GPinfo are sourced, where possible, from the operators of the fields only.
Outlines are updated at irregular intervals but with at least one major update per year. Field outline for Ichthys is sourced from IHS Energy, 2006.
Figure 4.33 Gas fields in Browse and Bonaparte Basins
Source: Field outlines are provided by GPinfo, an Encom Petroleum Information Pty Ltd product. Field outlines in GPinfo are sourced, where
possible, from the operators of the fields only. Outlines are updated at irregular intervals but with at least one major update per year. Field
outline for Ichthys is sourced from IHS Energy, 2006
associated with oil, will become available when

the liquid resource is produced, and must be sold
(piped), flared or reinjected to maintain reservoir
pressure. Depending on the nature of the reservoir,
up to 80 per cent of reinjected gas can be recovered
once oil production or condensate stripping has
ceased (Banks 2000). Around 94 per cent of
operating fields producing gas in Australia also
produce oil or condensate or both. When oil, gas,
LPG and condensate are produced jointly, the cost of
production is shared and the cost of each product is
not distinguishable. This can result in greater returns
on the sale of valuable by-products and can speed
development of the gas accumulation, as for example
at the East Spar and Bayu-Undan projects (table 4.16).
110
CSG is almost entirely methane and unlike many

conventional gas fields has no associated petroleum
liquids. However, CSG is associated with groundwater,
and coal formations have to be de-watered to lower the
pressure before the coal seam gas can be produced.
This can involve the production of large volumes of
saline water to be disposed of (for example by deep
re-injection in the sub-surface) or treated (for example
by de-salination). In 200607 Queensland CSG fields
produced 85 PJ of gas but also 9491 million litres
(ML) of water, roughly 110ML for each petajoule of
gas (Green and Randall 2008). Scaling up for LNG
production may produce up to 40 ML a day from
a LNG project. In some cases water resources for
industrial and agriculture uses or environmental flows
are produced, for example, the Spring Gully Reverse
Osmosis Water Treatment Plant which has a capacity
of 9 ML a day (Origin Energy 2009).
Gas, both conventional and unconventional, can
partner with intermittent renewable energy sources
to maintain a sustained power output. Analysis
of solar, wind and wave energy potential around
Australia suggest the North Perth and Otway basins
as areas where identified gas resources and high
wind and wave potential energy occur relatively close
to existing pipeline and electricity grid infrastructure
and to domestic markets. This linkage between
gas-fired electricity and wind generation via the
transmission network has been identified in various
projections such as the Vision 2030 by Vencorp in
2005 and the recent AEMO update (AEMO 2009b).
Technology developments
Advances in technology can increase access to
reservoirs, increase recovery rates, reduce exploration,
development and production costs, and reduce
technological and economic risks.
Technological improvement has had a significant
influence on exploration activity by increasing the
accessibility of resources. In the period 19891998,
for example, technological advances (mainly 3D
seismic) were the principal driver of new discoveries
and rising success rates in offshore Australian
exploration (Bradshaw et al. 1999) and continue to
yield gains especially in the basins along the northwest margin (Longley et al. 2002; Williamson and
Kroh 2007).
Offshore gas production is more challenging than
onshore production. The majority of Australias
conventional gas resources are located offshore
and consequently the majority of research and
development has been directed toward improving
offshore technologies. New drilling technologies used
in the production phase allow better penetration
rates even in very deep water (beyond 3000 m), with
lower costs and higher efficiency. Such technologies
include multi-lateral drilling (multiple well bores from
a single master well), extended reach drilling (up to
11000m) and horizontal drilling with paths through
the reservoir of up to 2 km.
Sub-sea production facilities instead of above-water
platforms are lower cost developments which also
reduce weather and environmental risk. Significant
development of sub-sea technologies for the
transport of natural gas include deepwater pipeline
installation through the J-lay method (as distinct from
the S-lay method traditionally used for up to 2500 m
depth). This allows pipelines to be laid up to several
kilometres in depth (IEA 2008).
There have also been improvements to LNG
technologies over time to improve efficiency and
reduce costs, including increasing LNG train size
and developing more suitable liquefaction methods
to suit gas specifications. Innovations such as
floating LNG facilities are also being explored. They
would have a fundamental impact on the industry
by commercialising relatively small and previously
stranded gas resources (Costain 2009; see box 4.4
for more details).
Gas-to-liquids (GTL) provides another option for
bringing gas to markets. It allows for the production
of a liquid fuel (petrol or diesel products) from natural
gas which can be transported in normal tankers like
oil products. GTL is a potential solution to stranded
gas reserves too remote or small to justify the
construction of an LNG plant or pipeline. However,
the commercial viability of GTL projects has not yet
been widely established. There are currently only
three commercial-scale plants in operation, in South
Africa, Malaysia and Qatar. Two more plants are
under construction in Qatar and in the Niger Delta,
scheduled to commence operations in 2010 and
2012 respectively (IEA 2009c). A GTL demonstration
plant that directly uses natural gas containing CO2
as a feedstock was recently opened in Japan (Nippon
GTL 2009). This technology may be applicable to
some of Australias gas fields.
Recent advances in gas-fired electricity generation
technology have improved the competitiveness of gas
compared with coal. Open cycle (or simple cycle) gas
combustion turbine is the most widely used, as it is
C H APTE R 4: GAS
ideal for peaking generation. Significant efficiency

gains have been recognised with the natural gas
combined-cycle (NGCC) electricity generation plant,
which currently has worlds best practice thermal
efficiencies (box 4.5).
Cost competitiveness
Brownfields projects, which are an expansion of an
existing project, tend to be more attractive on both
capital and operating cost grounds than new projects
(often referred to as greenfield projects). This is
because existing infrastructure and project designs
can be used, among other reasons. For example, the
fourth and fifth trains in the North West Shelf Venture
have significantly lower unit costs than the greenfield
Pluto and Gorgon developments currently under
construction (table 4.17).
The cost of new developments has increased rapidly,
with the average cost worldwide more than doubling
between 2004 to 2008. Over the same period,
development costs in Australia have also increased
(APPEA 2009b) and are likely to increase further as
a result of development of projects in deeper water
that are typically more expensive than onshore and
shallow water projects.
The capital costs of LNG liquefaction plants fell from
approximately US$600 per tonne per year of installed
capacity in the 1980s to US$200 in the 1990s,

but in 2008 rose to around US$1000 or more for
some new plants. It must be borne in mind, however,
that unit costs are highly dependent on site-specific
factors. A tight engineering and construction market
has contributed to recent delays in LNG projects as
well as cost increases. Material costs have increased
sharply, particularly for steel, cement and other raw
materials. Limited human resources in terms both
of the number of capable engineering companies
and of engineers, as well as skilled labour for
construction, have also been a factor (IEA 2008).
Generally, CSG can be produced using similar
technologies to those used for the development of
conventional gas. Compared with the conventional
gas, CSG projects can generally be developed at a
lower capital cost because the reserves are typically
located at a shallow depth and hence require
smaller drilling rigs. The production of CSG can
also be increased incrementally given the shallow
production wells. Although hundreds of wells are
needed to produce a field as opposed to a few dozen
at most in a giant conventional gas field, they are
hundreds of metres rather than kilometres deep,
and take a few days as opposed to weeks to drill
(box 4.6). Nonetheless, they have their own particular
engineering requirements.
Box 4.4 Developments in LNG technologies
LNG trains have been increasing in size (figure

4.34), leading to economies of scale which, until
relatively recently, contributed to a decline in unit
costs for LNG projects. Trains of up to 8 Mt per
year, often referred to as mega-trains, are being
constructed in Qatar.
Smaller scale trains are now also being explored.
Smaller scale export plants of 12 Mt per year,
which were common in the early days of LNG in
the 1960s and 1970s, were not constructed in
the 1980s and 1990s, as liquefaction technology
advanced and train size grew to reduce unit
investment costs. Potential advantages of
smaller trains include smaller feedgas and
market requirements, smaller capital expenditure
and potentially quicker decision-making and
implementation. While smaller projects would not
benefit from scale economies, which may result
in a higher unit cost of gas, they may allow other
companies to enter the LNG market (IEA 2008).
Smaller LNG export projects that have emerged in
Australia include some of the coal seam gas based
proposed projects in Queensland.
Some offshore LNG liquefaction projects are also

being planned for developing relatively small and
stranded gas resources. These include the concept
of liquefaction plants onboard LNG tankers, and
floating production and storage operations. This could
be particularly advantageous for developing offshore
stranded gas deposits where the size of the reserve
and the distance to shore does not justify a pipeline
connection to an onshore liquefaction plant (IEA
2008). This prospect is currently being considered by
several project proponents in Australia, including the
proposed Prelude, Bonaparte and Sunrise projects
(ABARE 2009c).
8
Australian projects
Other projects
Mtpa
Technological developments have focussed

on optimising train size, choice of compressor
drivers, and the suitability of different liquefaction
technologies to certain gas qualities.
111
0
1970
1975
1980
1985
1990
Year
1995
2000
2005
2010
AERA 4.34
Figure 4.34 Annual liquefaction capacity of LNG trains

Source: ABARE
In some cases coal seam geology makes it difficult

to extract gas, and advanced techniques are required
to enhance well productivity. Moreover, the water
contained in the coal seam needs to be removed
before gas can be extracted. These difficulties
associated with the development of CSG need to be
carefully managed to avoid increased costs. In the
Australian context, wide diameter holes with preslotted casing and under-reamed coal intervals have
been found to improve CSG well performance.
Development timeframe
The time taken to bring a resource to market affects
the economics of a project. Typically, developing gas
fields for the domestic market takes less time than
LNG export projects. The size of a project is also

likely to affect the time that it takes to come online.
Almost 70 per cent of all projects currently producing
gas in Australia were completed within ten years
of initial discovery (figure 4.36). On average, gas
projects took around eight and a half years to bring
into production.
On the other hand, LNG projects in Australia and
worldwide often have a significant lag between
first announcement, final investment decision,
and development, as proponents undertake various
studies to determine project feasibility, its design
and its market prospects (seeking to secure long
term markets) before construction commences.
Table 4.17 Australian LNG projects, capital costs and unit costs
Project
State
Year
completed
Capital cost
A$b
Capacity Mt
Unit cost $/t
WA
2004
2.5
4.4
57
Darwin LNG
NT
2006
3.3
3.2
103
North West Shelf 5th train
WA
2008
2.6
4.4
59
Pluto LNG
WA
late 2010
12.0
4.3
279
Gorgon LNG
WA
2015
43.0
15.0
287
North West Shelf 4th train
Source: ABARE
Box 4.5 Natural Gas Combined Cycle Power Plants

112
This technology is based on generating electricity

by combining natural gas fired turbines and steam
turbine technologies. It uses two thermodynamic
cycles the Brayton and Rankine cycles. Electricity
is first generated in open cycle gas turbines (Brayton
Cycle) by burning the gas and the exhaust heat is
then used to make steam to generate additional
electricity using a steam turbine (Rankine Cycle).
This is shown schematically in figure 4.35.
NGCC technology provides plant efficiencies of up
to 50 per cent. Other advantages of NGCC plants
are reduced emissions, high operating availability
factors, relatively short installation times, lower
water consumption, and flexibility in despatch. The
size of combined cycle turbines has increased as
the technology has matured; units up to 1000 MW
capacity are now available.
As of 2009 there were 12 gas-fired combined cycle
power plants operating in Australia with a combined
capacity around 3 GW and a further four under
construction with a combined capacity of around 2
GW. Three of the largest of the gas-fired combined
cycle power plants are the 435 MW NGCC plant at
Tallawarra near Wollongong, commissioned in March
2009, the 1000 MW Mortlake gas-fired power station
in Victoria due for commissioning in 2010 and the
630 MW Darling Downs gas-fired power station at
Braemar near Dalby due to be commissioned in early
2010. The Darling Downs plant will be fuelled by coal
seam gas from reserves near Roma and Chinchilla.

A proposed 550 MW combined cycle gas-fired power
station at Morwell in Victoria will use a combination
of natural gas and syngas produced from drying and
gasification of brown coal from the Latrobe Valley.
Condensor
Pump
Electrical
generator
Steam turbine
Boiler/heat exchanger
Electrical
generator
Gas turbine
AERA 4.35
Figure 4.35 Schematic picture of combined cycle gas

turbine
Source: Wikimedia ((http://en.wikipedia.org/wiki/Combined_cycle_
gas_turbine)
C H APTE R 4: GAS
Construction alone can take at least three years,

and often longer. The Darwin LNG project, for example,
took 32 months from notice of construction in June
2003 to the first delivery of LNG in February 2006.
The larger Pluto project is anticipated to take five years
(table 4.18) and will be the fastest LNG project (from
discovery to production) to be developed in Australia
and one of the fastest by world standards.
Transmission and distribution infrastructure

The last two decades have seen large investments
in transmission pipelines and distribution networks
to meet the steady growth in domestic gas demand.
Before the 1990s Australias transmission pipelines
were a series of individual pipelines, each supplying
a demand centre from a specific gas field. The
majority were government owned and there was little
interconnection. Since the early 1990s Australias
transmission pipeline network has almost trebled
in length (AER 2008); and the eastern states have
become interconnected, with Adelaide, Canberra,
Melbourne and Sydney each now being supplied
by two separate pipelines. Since 2000 more than
$4billion has been invested in new pipelines and the
expansion of pipeline capacity with major investments
including the Eastern Gas Pipeline, the SEA Gas
Pipeline and expansion of the Dampier to Bunbury
Pipeline (AER 2009).
This level of investment looks set to continue in the
short term with a further $1.8 billion of investment,
in various stages of commitment, announced for
the next 4 years with major projects including the
Queensland to Hunter Gas Pipeline and expansion
of the Southwest Queensland Pipeline (AER 2008).
All of this investment has been by the private sector,
with the last government owned pipeline being sold
in 2000.
>25 years
2%
20-25 years
12%
0-5 years
46%
The National Gas Law (NGL) and National Gas

Rules (NGR) provide a regime to give third parties
access to transmission pipelines and distribution
networks. Pipelines and networks that have undue
market power are regulated under the NGL & NGR,
which requires them to publish tariffs that must be
approved by the AER and which can be enforced
by the AER in the event of a dispute. Eleven of
Australias 28 major transmission pipelines are
regulated and, with a few exceptions, all distribution
networks are regulated.
Most domestic gas is traded through bilateral
contracts between producers and users (retailers
and large customers) and, with the exception of the
Victorian Gas Market, there is little price transparency.
Also, the capacity on some transmission pipelines is
fully contracted, making it difficult for new players to
enter some gas markets. The Council of Australian
Governments, through the Ministerial Council on
Energy, is introducing reforms to Australias gas
markets to promote their ongoing development and
address some of these issues. These reforms include:
The National Gas Market Bulletin Board (Gas BB):
The Gas BB website publishes daily supply and
demand data for transmission pipelines in the
eastern states with the aim of facilitating trade in
gas and pipeline capacity.
The Gas Statement of Opportunities (GSOO):
An annual publication that provides 20 year
forecasts of gas reserves, demand, production
and transmission capacity for Australias eastern
and south eastern gas markets. The GSOO
aims to assist existing industry participants and
potential new investors in making commercial
decisions about entering into contracts and
investing in infrastructure.
The Short Term Trading Market (STTM):
Commences initially in Adelaide and Sydney in
June 2010 with the intention it will be expanded
to other jurisdictions in the future. The STTM
will bring price transparency to these markets
by setting a daily price for gas.
15-20 years
5%
10-15 years
12%
Environmental and other considerations
5-10 years
23%
AERA 4.36
Figure 4.36 Development time for gas producing

projects in Australia
There has also been significant investment in

Australias distribution networks, which have increased
in length by around 20 per cent since 1997. Investment
to expand and augment networks is forecast to grow
by around $2 billion for the next Australian Energy
Regulator regulatory five year cycle (AER 2009).
The Australian state/territory governments require

petroleum companies to conduct their activities in a
manner that meets a high standard of environmental
protection. This applies to the exploration,
development, production, transport and use of
Australias gas and other hydrocarbon resources.
Onshore and within three nautical miles of the
113
coastline the relevant state/territory government

has the main environmental management authority
although the Australian Government has some
responsibilities regarding environmental protection,
especially under the Environmental Protection and
Biodiversity Conservation (EPBC) Act 1999.
An issue of increasing significance in gas exploration
and development onshore, particularly for CSG,
is gas water management which includes not only
the handling of the co-produced water but also the
hydrogeological impacts on subsurface aquifers. The
potential impacts on groundwater resource(s) in the
Surat Basin as a result of CSG developments were
considered in detail in a water management study
(DNRME 2004). Under the Queensland Coal Seam
Gas Water Management Policy use of evaporation
ponds as a primary means of disposal of coal seam

gas water is to be discontinued and CSG producers
will be responsible for treating and disposing of
coal seam gas water. Coal seam gas water will be
required to be treated to a standard defined by
the Environmental Protection Agency (EPA) before
disposal or supply to other water users. There are a
number of options for the disposal and treatment of
the large volumes of water produced from CSG wells,
such as deep injection into the subsurface, local
use in coal washing and some rural purposes, and
treatment to produce fresh water.
In the offshore areas beyond coastal waters the
Australian Government has jurisdiction for the
regulation of petroleum activities. The objectivebased Petroleum (Submerged Lands) (Management
Box 4.6 Comparison of conventional and unconventional gas developments

Conventional field developments tend to have high
capital costs relative to operating costs, and long
construction periods (up to five years for LNG projects).
Conventional gas wells are generally drilled deep into

highly pressured formations (24 km or more), and
hence are relatively expensive. However, production
wells can remain viable for 5 to 20 years and the
often large, high pressure reservoirs can deliver gas
at a faster rate than CSG.
CSG developments have lower capital costs, shorter

construction times and minimal infrastructure per
well, but higher operating costs. As CSG wells have
significantly lower production rates, a larger number
of wells are required to provide a level of production
comparable to conventional offshore gas wells.
The shorter well life for CSG wells also contributes
to relatively higher operating costs. Further details on
costs are in section 4.2.2
The IEA has produced a long term gas supply cost
curve, which highlights the overall production costs
of competing sources of gas, and the relative cost
advantage of a conventional supply source. Other
things being equal, conventional gas is likely to be
developed first (figure 4.37).
10
10
Produced
Shale
Sour
CSG
Conventional
Tight
Deepwater
15
Arctic
15
Total LNG
1000 km
0
0
5000
10000
15000
20000
25000
30000
35000
AERA 4.37
Pipeline
Resources (tcf)
Figure 4.37 Long term gas supply cost curve showing relative production costs of different gas sources
Source: IEA 2009c
LNG
Transportation cost A$ 2008/GJ
CSG wells are shallow by comparison (less than 1 km),

drilled into lower pressured formations and usually
have a much shorter life (PricewaterhouseCoopers
2007). CSG typically emerges at a pressure of about
one twentieth that of conventional gas and each
well also normally produces a daily volume of only
5 per cent of a conventional gas well (Kimber and
Moran 2004).
Production cost A$ 2008/GJ
114
The properties of conventional gas and CSG

accumulations have important implications for their
development costs.
C H APTE R 4: GAS
Environment) Regulations 1999 provide companies

with the flexibility to meet environmental protection
requirements. Petroleum exploration and development
is prohibited in some marine protected areas offshore
(such as the Great Barrier Reef Marine Park) and
tightly controlled in others where multiple marine uses
have been sanctioned (figure 4.38).
Environmental Impact Assessments (EIA) required
as pre-conditions to infrastructure development
applications especially of larger projects may
require environmental monitoring over a period
of time as a condition to the approval before the
development can commence. In some cases regionalscale pre-competitive base line environmental
information is available from government in
the form of regional syntheses containing
contextual information that already characterises
the environmental conditions for the proposed
development. In the offshore area typical data sets
that are required for marine EIA in EPBC Act referrals
and can be synthesised and made available by the
Australian Government include: bathymetry, substrate
type, seabed stability, ocean currents and processes,
benthic habitats and biodiversity patterns.
120
The content of CO2 in natural gas is an

environmental consideration in some fields.
The CO2 content in gas fields varies widely and
the liquids-rich gas accumulations of the Browse
and Bonaparte basins tend to have relatively high
CO2 contents. Accessing this gas may require
disposal of significant volumes (several tcf) of
CO2. Geological storage is a possible option (box
5.4 in Chapter 5 Coal) and is being facilitated
by the current carbon capture and storage (CCS)
acreage release (Department of Resources,
Energy and Tourism 2009). The Gorgon Project
includes a major CO2 injection component
(Chevron Australia 2009).
There are also jurisdictional considerations.
An offshore gas field which supplies an onshore
gas plant requires federal, state or territory
and local government co-ordination in resource
management and development approvals
processes (Productivity Commission 2009).
Geological provinces containing gas resources
that are contiguous across international
boundaries, such as the JPDA in the Timor Sea,
require international coordination.
130
140
150
750 km
DARWIN
Gre
10
ier
Barr
at
Re
e
ar
in
Park
20
BRISBANE
PERTH
30
SYDNEY
ADELAIDE
MELBOURNE
HOBART
40
Marine park/reserve
Australian Exclusive Economic Zone
AERA 4.38
Figure 4.38 Current marine protected areas of Australia

Source: DEWHA 2009
115
Proven world natural gas reserves have grown at an

annual rate of 3.4 per cent since 1980 outstripping
oil reserve growth as a result of significant
discoveries and better assessments of existing
fields (World Energy Council 2007). In Australia,
future growth in conventional gas, CSG and other
unconventional gas resources will all add to an
expanded total gas inventory by 2030, even with an
increase in gas production.
For conventional gas resources, additions will come
from several potential sources:
Field growth extensions to identified commercial
fields (growth in reserves) and to currently subeconomic fields;
Identified resources not yet booked very recent
discoveries, accumulations in non producing
basins not in current EDR or SDR categories
(inferred resources);
Discovery of new commercial fields in established
hydrocarbon basins; and
Discovery of new fields in frontier basins that
become commercial by 2030.
Field reserves growth

116
Growth in reserves in existing fields can add

significantly to total reserves. The additional
conventional gas resource contributed by field
growth by 2030 is estimated at between 35 200
and 46200PJ (32 and 42 tcf). This projection is
consistent with actual historical data where reserves
in fields discovered before 2002 have increased by
5.6percent in the period 2002 to 2007 giving an
annual increase at the lower end of the projected range.
Powell (2004) provided qualitative assessments
of the potential for future growth of gas reserves
and noted that, as a large proportion of Australias
gas fields are undeveloped, there should be
considerable potential for reserve growth. However,
the advent of 3D and 4D seismic imaging should
provide greater geological certainty and reduce the
extent to which initial estimates of reserves are
understated in the future.
development of these discoveries will vary depending

on location, resource size, quality (CO2 and liquids
content) and commercial factors (table 4.16).
In addition to very recent discoveries in established
gas producing basins, there are a number of
conventional gas accumulations in undeveloped
basins both onshore and offshore (table 4.18)
that are not aggregated in EDR or SDR. Examples
include the Phoenix gas accumulation in the
Bedout Sub-basin, the Hogarth accumulation in
the Clarence Moreton Basin and gas flows from
wells in the onshore Canning, Georgina and Ngalia
basins. Remote location, size of the resource and
resource quality (for example poor reservoir) are
factors limiting their development but some of these
accumulations may move into EDR and SDR in the
years to 2030. For example, there may be local niche
markets for conventional gas in power generation
related to mineral processing or co-location
with renewable but intermittent energy sources.
Technological advances in producing gas from poor
reservoirs may also lead to additional resources
and some of these accumulations may eventually be
produced as tight gas fields.
Discovery of new fields in established

hydrocarbon basins
A major potential contributor to Australias
conventional gas resources to 2030 is the discovery
of new fields in the established hydrocarbon
producing basins. Unlike the identified resources
discussed above, discovery risk applies, so that the
resource found by 2030 is dependent on the number
of exploration wells drilled, the size of the prospects
tested and the success rate. Active exploration
programs are underway in the Carnarvon, Browse
and Bonaparte basins, and recent success rates for
targeted gas exploration in deep water are greater
100
PJ (x1000)
4.4.2 Conventional gas resource

outlook
50
Identified resources not yet included in

EDR or SDR
In addition to the 590 conventional gas fields in 14
basins aggregated in the EDR and SDR categories
(Geoscience Australia 2009), there are a number of
other known gas accumulations. They include recent
discoveries not yet appraised (for example Martell,
Glencoe, and Yellowglen in the Carnarvon Basin
and Burnside and Poseidon in the Browse Basin).
Although located in deep water these accumulations
could add significantly to gas resources when
they are appraised. The potential and timing of
Bonaparte
Carnarvon
Browse
Gippsland
Basin
95%
Mean
5%
AERA 4.39
Figure 4.39 Estimates of undiscovered resources of

conventional gas in four proven offshore basins
Note: 95%, Mean and 5% denote the probability of the resources
exceeding the stated value
Source: USGS 2000
C H APTE R 4: GAS
than 50percent. This is considerably higher than

the historical success rates of around 20percent
for petroleum exploration in Australian onshore and
offshore basins.
Estimates of Australias undiscovered conventional
gas resources in four proven basins are shown
in figure 4.39. This USGS (2000) assessment is
substantially larger than the conservative short-time
horizon Geoscience Australia estimates, to the extent
that the P-95percent USGS estimates are closest to
the P-5percent estimates by Geoscience Australia
(Chapter 3 Oil provides a more detailed discussion
of petroleum resource assessment methodologies).
The USGS assessment represents the preferred
indicative estimate of ultimate resource potential for
these basins (Powell 2001) and is used to estimate
potential resources from producing basins by 2030.
These estimates will have been influenced by a

number of discoveries made since the USGS (2000)
assessment was published. For example, the USGS
(2000) mean estimate of 71 448 PJ (65 tcf) of gas
remaining to be discovered in the Carnarvon Basin
predates the giant Io-Jansz discovery which contains
20 tcf of gas (Walker 2007) and is one of the
largest gas fields yet found in Australia. The gas is
reservoired in Late Jurassic channel sands (Jenkins
et al. 2003) rather than in a Triassic fault block the
usual habitat of the other giant gas accumulations
on the North West Shelf and thus demonstrates a
limitation of forward modelling when dealing with new
play types.
Similarly, the assessment predates the Wheatstone
(2004, 4364 PJ), Pluto (2005, 5101 PJ), and Xena
(2006, 539 PJ) gas discoveries which highlight the
Table 4.18 Status of gas exploration and discovery in Australia by basin

Basin
Status
First Discovery
Production/Commercial Discovery
Adavale
past gas producer
1964 Gilmore
1995 2002 Gilmore gas production
Amadeus
gas producer
1965 Palm Valley
1983 gas piped to Alice Springs
Bass
gas producer
1967 Bass3 gas
2006 BassGas project
Bonaparte
gas producer
1969 Petrel
2006 Darwin LNG production
Bowen
gas producer
1970 Rolleston
1990 Denison Trough gas piped to

Brisbane
Browse
potential gas producer
1971 Scott Reef
2009 Ichthys project in FEED
Canning
1966 St Georges
Range
Carnarvon onshore
gas producer
1966 Onslow1
1991 Tubridgi gas production
Carnarvon offshore
gas producer
1971 North Rankin
1984 NW Shelf gas piped to Perth
Carnarvon Exmouth Plt.
1980 Scarborough
Cooper
gas producer
1963 Gidgealpa
1969 gas piped to Adelaide
Eromanga
gas producer
1976 Namur
1978 Strzelecki 1st commercial oil
Georgina
gas flows
1973 Ethabuka
Gippsland
gas producer
1965 Barracouta
1969 gas piped to Melbourne
Gunnedah
gas producer
2000 Coonarah
2004 Wilga Park gasfired power station
Maryborough
gas flows
1967 Gregory River
CSG potential
Ngalia
gas flow
1981 Davis
Offshore Canning
gas flows
1980 Phoenix
Otway onshore
gas producer
1959 Port Campbell
1986 gas piped to Warrnambool
Otway offshore
gas producer
1993 Minerva
2005 Minerva gas production
Pedirka
gas shows
Perth offshore
gas show
1978 Houtman1
Perth onshore
gas producer
1964 Yardarino
1971 Dongara production
Surat
gas producer
1900 Hospital Hill
1969 gas piped to Brisbane
Sydney
gas shows
1956 Camden
CSG production
Tasmania
gas shows
1920 Bruny Island
CSG, shale gas potential?
CSG potential
117
potential for further gas discoveries in the basin.

More than 37 400 PJ (34 tcf ) of conventional gas
has been discovered in the Carnarvon Basin since
2000, exceeding the P50 Geoscience Australia
estimate and representing approximately 40percent
of the mean ultimate undiscovered gas resources
estimated by the USGS.
The USGS (2000) assessed Australias producing

onshore basins as having only modest potential
for discovery of new resources around 3 per
cent of mean undiscovered gas (3590 PJ, 3.3 tcf).
Exploration is continuing, especially in the CooperEromanga but also the Bowen-Surat, Canning and
Perth basins where there is potential for further
discoveries of both conventional gas and coal
seam gas.
Undiscovered gas potential estimates for the Bonaparte

Basin range from the 3198 PJ (3 tcf) of gas assessed
by Barrett et al. (2002), using a medium-term discovery
process model which makes a projection of resources
expected to be found in the next 10 to 15 years,
to the 25 935 PJ (23 tcf) USGS (2000) estimate of
the ultimate hydrocarbon potential in the basin. The
recent Blackwood, Caldita and Barossa gas discoveries,
where exploration is continuing to define the size and
quality of the accumulations, confirm the potential
for remaining resources to be found in the Bonaparte
Basin. The development of the second LNG hub
at Wickham Point in Darwin Harbour to serve the
development of the Ichthys gas accumulation in the
Browse Basin is an added stimulus to the search for
gas in northern Australia.
110
120
Discovery of new fields in non-producing

and frontier basins
In addition to the 14 basins that have identified
commercial conventional gas resources, many
other Australian basins have gas occurrences
(figure4.40). Apart from the gas accumulations
already recognised in these basins there is also
the potential for the discovery of new fields.
As gas exploration matures in the established
basins, the size of drilling targets and
correspondingly the size of discovered fields
is likely to decline, unless reversed by new
opportunities created by new play concepts and
130
140
150
DARWIN
750 km
10
118
20
BRISBANE
PERTH
30
SYDNEY
ADELAIDE
Hydrocarbon Status
MELBOURNE
Producing (gas)
Flows in well tests
HOBART
40
Shows in wells
No show in wells
Undrilled
AERA 4.40
Figure 4.40 Australian gas occurrences, showing basins with conventional gas production, gas flows and gas shows,
drilled basins with no shows and undrilled basins
Note: Identified gas resources, including relative size, shown in figure 4.1
C H APTE R 4: GAS
technologies and, in the case of offshore basins,

opportunities identified in deeper water. However,
Australias frontier basins are poorly explored and the
largest structures remain untested.
Geoscience Australia is currently undertaking a
program of pre-competitive data acquisition and
interpretation to assess the petroleum potential of
selected frontier basins. Most gas discoveries have
been made during exploration for oil and that will
lead the search into new deepwater basins; the
potential of frontier basins is more fully discussed in
Chapter 3 Oil.
In comparison to Australias producing basins, there
is a higher degree of uncertainty in estimating the
undiscovered resources in the poorly explored frontier
and non-producing basins. A number of estimates
of undiscovered hydrocarbon potential are available
for individual frontier basins and for Australia as
a whole. The publicly available assessments have
not integrated the results from the current rounds
of pre-competitive data acquisition and focus on oil
rather than gas resources. The recent USGS CircumArctic Resource Appraisal (2009) offers a possible
approach to estimating undiscovered resources in
frontier areas by using basin analogs.
4.4.3 Unconventional gas resource outlook

For unconventional gas the understanding of
additions to the inventory of reserves from field
growth and new discoveries is less well established
than for conventional gas. In the outlook to 2030,
CSG is expected to remain the most important sector
of the unconventional gas industry; it is already
a significant source of gas in eastern Australia.
Currently, production of CSG is mainly from the
Bowen and Surat basins in Queensland, with some
production from the Sydney Basin in New South
Wales. Production is from Permian and Jurassic coals.
Gondwanan system
Over the past five years the focus of CSG exploration

has expanded into other coal basins and into other
parts of the stratigraphy, to coal deposits of widely
differing geological age. Triassic and Cretaceous
strata are now also an exploration target as well as
the Permian coals of the Gondwana basins (figure
4.41). CSG exploration in South Australia, Tasmania,
Victoria and Western Australia has increased as a
result of increasing CSG production in Queensland
and the success in producing CSG from low rank
coals in the United States. In South Australia, as at
mid-2009, there were nine petroleum exploration
licenses (PEL) granted and six under consideration for
exploration rights to evaluate CSG potential (including
underground coal gasification potential).
The Southern Cooper Basin is an area with potential
for CSG resources contained within Permian coal
seams intersected in previous petroleum exploration
wells. The shallowest Permian coal measures in
the Cooper Basin have thicknesses of up to 20 m
with a total seam thickness of up to 80 m between
depths of 1000 and 2000 m. There is also potential
for shale gas and tight gas resources. A significant
advantage of exploring for CSG in the Cooper Basin
is that substantial gas infrastructure, including a gas
pipeline servicing South Australia, Queensland and
New South Wales markets, already exists.
Estimates of aggregate CSG potential in Australia
are substantial (Baker and Slater 2009). Industry
estimates range from 250 tcf (260 000 PJ) according
to Santos (2009) to more than 300 tcf (300 000 PJ)
of gas in place (Arrow Energy 2009).
In addition to the new CSG resources identified by
current active exploration, it is expected that part of
the large inferred in-ground resource will move into
the EDR and SDR categories by 2030. There appears
to be significant potential for at least 15 times more
CSG than the current EDR.
Larapintine system
AERA 4.41
Figure 4.41 Distribution of Gondwanan (Permain) basins (potential CSG) and Larapintine (Early Paleozoic) basins
(potential for shale gas resources)
Source: Bradshaw et al. 1994
119
As exploration and development of Australias

gas resources proceeds, several basins notably
the Cooper Basin are likely to emerge as having
conventional, CSG and tight or shale gas resources.
4.4.4 Total gas resource outlook
120
Australias EDR of gas, both conventional and

unconventional, at 138 700 PJ (126 tcf) is
equivalent to more than 70 years of production at
current rates. Australian gas production is projected
to increase significantly over the period to 202930
but demonstrated gas resources (226500 PJ,
206tcf) exceed the estimated cumulative gas
production from 200809 to 202930 (119060PJ,
108 tcf). Total identified gas resources (393000PJ,
357 tcf) are nearly three times EDR and substantially
larger than the estimated cumulative gas production
from 200809 to 202930. Current identified gas
resources remaining in 2030 are estimated to be
equivalent to nearly 50 years of production at the
estimated 2030 production rates. Over the outlook
period it is expected that some of the currently
sub-economic demonstrated resources (SDR) and
large inferred (mostly CSG) gas resource will be
converted to EDR and enter production. Australias
gas resource base is therefore more than adequate
to support projected increases in production beyond
the outlook period.
The true size of Australias potential in-ground gas
resources is unknown and could be significantly
larger than the identified resources. There is no
current publicly available resource assessment
of Australias undiscovered conventional gas
resources that adequately reflects the knowledge
gained in recent years during the active programs
of government pre-competitive data acquisition and
increased company exploration during the resources
boom. In addition, the current knowledge base for
unconventional gas, especially tight gas and shale
gas, is inadequate for assessment. The potential
size of Australias CSG resources is as yet ill-defined;

companies have reported very substantial in-place
CSG resources. Better assessment of Australias
potential gas resources would be aided by both more
pre-competitive geoscientific information and further
exploration drilling.
4.4.5 Outlook for gas market

In the latest ABARE long-term projections (ABARE
2010) which incorporate the Renewable Energy
Target, a 5 per cent emissions reduction target and
other government policies, Australian gas production
is projected to increase by 6.7 per cent per year, to
reach 8505 PJ (7.7 tcf) in 202930 (tables 4.19 and
4.20). Australian gas consumption is projected to rise
by 3.4 per cent per year to reach 2575 PJ (2.1tcf)
in 202930. Gas exports, in the form of LNG, are
projected to expand even more quickly, by 9.5 per
cent per year to reach 5930 PJ (109 Mt) in 202930.
These results are discussed in more detail below.
Production
Over the medium term, the production of gas is
expected to continue to rise as developments now
under construction or in the advanced stages of
planning are completed (figure 4.42).
Over the longer term, natural gas production is
projected to increase to 8505 PJ by 202930,
growing at an average annual rate of 6.7 per cent
(figure 4.42). As with current production, the majority
of future conventional gas production is likely to
be sourced from offshore basins in north, northwest and south-east Australia. Western Australia
is projected to account for nearly two thirds of this
increase.
By 202930, total natural gas production in the
Eastern market is projected to be around 2861 PJ
(table 4.20). CSG production is projected to reach
2507 PJ in 202930, with CSG accounting for 88
per cent of the eastern Australian gas production.
A significant proportion of this CSG will be consumed
9000
8000
Exports
7000
6000
PJ
Understanding of the future potential tight gas and

shale gas resource in Australia is very limited.
Likely shale gas candidate formations have been
identified in the Cooper, Georgina and McArthur
basins, where some exploration drilling has taken
place in the Beetaloo sub-basin (Silverman et al.
2007). Apart from the organic rich shales in a
number of Larapintine (figure 4.41) and Centralian
basins (Bradshaw et al. 1994) across central and
western Australia, there may also be shale gas
potential in some of the less metamorphosed
parts on the fold belts in eastern Australia. North
American experience may provide a guide to future
tight gas and shale gas potential in Australia. The
rapid developments that have occurred there have
resulted in shale gas reserves growing more than
50 per cent from 2007 to 2008. They now exceed
CSG reserves (EIA 2009b).
Consumption
5000
Production
4000
3000
2000
1000
0
2005-06
2009-10
2014-15
2019-20
Year
2024-25
2029-30
AERA 4.42
Figure 4.42 Outlook for Australian gas supply-demand

balance
Source: ABARE 2010
C H APTE R 4: GAS
domestically, supporting the projected growth in gasfired electricity generation, particularly in Queensland
and New South Wales. The substantial projected
expansion of CSG in Queensland would suggest that
gas flow patterns may also change, with relatively
less gas flowing north from Victoria, and more
gas flowing south from Queensland. The positive
outlook for natural gas production from CSG projects
is projected to result in the eastern gas market
remaining in balance over the projection period.
By 202930, gross natural gas production in the
Northern Territory (including imports from the JDPA
in the Timor Sea for LNG production) is projected
to reach 677 PJ, growing at an average annual rate
of 4.5 per cent. Gas supply to the Northern market
(excluding LNG exports) is projected to meet demand
over the outlook period, increasing to 93 PJ in
202930.
Gross natural gas production in the Western market,
including LNG, is projected to grow strongly, at
an average rate of 7.1 per cent per year, to reach
4968PJ in 202930. This is underpinned by
increasing demand in the domestic market and
increasing global demand for LNG.
Table 4.19 Outlook for Australias gas consumption,

production and trade
unit
202930
Average
annual
growth
200708 to
202930
PJ
8505
6.7
tcf
7.7
Share of total
24.3
Primary
consumption
PJ
2575
3.4
tcf
2.3
33.4
TWh
135
5.0
Share of total
36.8
Exports
PJ
5930
9.5
Mt
109
Production
Share of total
Electricity
generation
Note: Production includes imports from JPDA

Source: ABARE 2010
Table 4.20 Outlook for Australias gas markets,
Consumption
Gas is projected to be the fastest growing fossil
fuel over the period to 202930. Primary gas
consumption is projected to rise by 3.4 per cent
per year over the outlook period to reach 2575 PJ
by 202930 (figure 4.43). The share of gas in total
primary energy consumption is projected to rise to 33
per cent in 202930. This growth in demand is driven
primarily by the electricity generation sector and the
mining sector, and reflects the shift to less carbon
intensive fuels in a carbon constrained environment.
3000
36
2500
30
2000
24
202930
PJ
Production
2861
6.7
conventional gas
353
-2.2
coal seam gas
2507
14.9
Consumption
1501
3.6
Exports
1360
677
4.5
Consumption
93
2.2
Exports
583
5.0
Eastern gas market
Northern gas market

Production
1500
18
1000
12
Production
4968
7.1
500
Consumption
982
3.2
Exports
3986
9.0
Production
8505
6.7
Consumption
2575
3.4
Exports
5930
9.5
0
199900
200002
200304
200506
200708
PJ
Average
annual growth
200708 to
202930
202930
Year
Primary consumption
(PJ)
Share of total
(%)
AERA 4.4
Figure 4.43 Outlook for Australian gas consumption,

Source: ABARE 2010
Western gas market
Australian total
Note: Production includes imports from JPDA

Source: ABARE 2010
121
Gas-fired electricity generation and its share in

total electricity generation are projected to increase
considerably over the medium to long term. Electricity
generation from natural gas is projected to grow at
an average rate of 5 per cent per year to 135 TWh
in 202930. The share of gas in total electricity
generation is projected to grow to 37 per cent in
202930 (figure 4.44).
The projected increase in gas-fired electricity
generation is supported by the significant volume of
currently committed electricity generation capacity
(see section on proposed project developments).
Gas-fired electricity generation is based on mature
technologies with more competitive cost structures
relative to many renewable energy technologies.
As such, it has the potential to play a major role in
the transition period until lower-emission technologies
become more viable.
LNG exports
Australia is expected to significantly expand LNG
exports over the next two decades. This reflects not
only Australias abundant gas reserves and their
proximity to growing Asian Pacific markets, but also
Australias attractiveness as a reliable and stable
destination for investment. CSG LNG is also expected
to contribute significantly to the growth of the sector.
By 202930, LNG exports are projected to reach

109Mt, reflecting an average annual growth rate over
the outlook period of 9.5 per cent. Production of LNG
is projected to increase its share of total Australian
gas production to 70 per cent by 202930.
150
90
At the end of October 2009, there were eight upstream

gas projects under construction or committed across
Australia (table 4.21). Of these projects, four were
located in the Carnarvon Basin, and others in the
Otway and Gippsland basins. The projects have a
combined gas production capacity of 1206 PJ per
year. There are also five gas projects with a combined
capacity of 176 PJ per annum at a less advanced
stage of development (table 4.22).
There is also one upstream coal seam gas project
under construction at the end of October 2009, located
in the Bowen-Surat Basin in Queensland. This project
will have a gas production capacity of 23 PJ per year.
Several more CSG projects in Queensland and New
South Wales are also at the planning stage (table 4.23).
There are also several tight gas projects which have
been proposed (table 4.24).
Pipeline
Accompanying the expansion of Australias gas
production capacity is an expansion to the transmission
pipeline. The largest expansion under construction,
in terms of capacity, is the Stage 5B expansion of the
Dampier Bunbury gas pipeline in Western Australia
(table 4.25). The pipeline capacity will increase to
327PJ per year when the Stage 5B expansion is
completed. Several smaller pipeline expansions are
committed or being constructed in New South Wales,
Victoria, South Australia and Queensland.
At the end of October 2009 there were four
advanced gas-fired electricity generation projects
with a combined capacity of 1352 MW that are
all scheduled to be in operation by the end of
2010. There are also two CSG-fired projects under
construction, which would add a further 770 MW of
capacity by the end of 2010 (table 4.26). In addition,
there are a further 35 gas- and CSG-fired generation
150
(TWh)
125
32
CSG
100
Share of total (%)
24
%
60
16
30
0
1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 200700
01 02
03
04
05
06
07
08
202930
Mtpa
120
Upstream
40
TWh
122
At the end of October 2009, there are two LNG

plants under construction, the Pluto LNG project
(annual capacity of 4.3 Mt) and the Gorgon LNG
project (annual capacity of 15.0 Mt). The projects are
scheduled to be completed by late 2010 and 2015
respectively. There are a number of other LNG plants
that are at a less advanced stage (undergoing FEED
studies), awaiting various government or internal
approvals.
Proposed project developments
Conventional gas
75
50
25
0
Existing
Under construction
Planned/proposed
AERA 4.45
AERA 4.44
Figure 4.44 Outlook for Australian gas-fired electricity

generation
Figure 4.45 Proposed Australian LNG export capacity
Source: ABARE 2010; IEA 2009a
Source: ABARE 2009c
C H APTE R 4: GAS
projects at a less advanced stage with a combined

capacity of more than 11000MW (table 4.27).
LNG
There are a significant number of new LNG projects
proposed in Australia. In addition to the 19 Mt of
export capacity under construction, there is at least
another 60 Mt (and potentially up to 76 Mt) of LNG
projects based on conventional gas fields at various
stages of FEED, feasibility and prefeasibility studies
(table 4.28).
There are also at least five CSG-based LNG projects
currently under consideration (table 4.29). All these
projects are expected to be located in Queensland,
with a combined capacity of around 35 Mt by the
middle of next decade. This is similar to the LNG
production capacity from conventional gas currently
in existence or under construction located off the
northwest coast of Australia. CSG projects represent
about 40 per cent of the planned or proposed new
LNG export capacity (figure 4.45).
If all of these proposed LNG export projects are
realised, it would amount to more than five times
current export capacity. Several of the project

developers have announced a planned or target
start up date by the middle of this decade.
However, it is not expected that all of these
projects will actually be realised in the time frame
announced.
Traditionally, LNG projects have not been developed
until there is sufficient demand to underpin the
required investment. A number of projects in table
4.28 have already been marketed for several years
and their development date postponed to enable
LNG markets to be secured. This is consistent
with LNG projects in many other countries. Some
of the projects are also targeting the same market
opportunities.
While there is a move towards building some spare
capacity, projects are still waiting to secure at
least some long term contracts with buyers ahead
of the commencement of construction. In addition
to potential demand side constraints, Australia is
competing with other planned projects around the
world for limited resources to finance, design and
construct LNG terminals.
Table 4.21 Conventional gas projects at an advanced stage of development, as of October 2009
Project
Company
Basin
Status
Start up
Capacity
Capital
Expenditure
Henry gasfield
Santos/ AWE/
Mitsui
Otway
Under
construction
early 2010
11 PJ pa
$275 m
Kipper gas
project (stage
1)
Esso/ BHP
Billiton/
Santos
Gippsland
Under
construction
2011
30 PJ pa
US$1.1 b
(A$1.3 b)
Longtom gas
project
Nexus Energy
Gippsland
Under
construction
2010
25 PJ pa
$300 m
NWS CWLHa
Woodside
Energy/ BHP
Billiton/ BP/
Chevron/
Shell/ Japan
Australia LNG
Carnarvon
Under
construction
2011
35 PJ pa
US$1.47 b
(A$1.8 b)
NWS North
Rankin B
Woodside
Energy/ BHP
Billiton/ BP/
Chevron/
Shell/ Japan
Australia LNG
Carnarvon
Under
construction
2012
967 PJ pa
$5.1 b
(A$6.1 b)
Pyreneesa
BHP Billiton/
Apache Energy
Carnarvon
Under
construction
early 2010
23 PJ pa
US$1.68 b
(A$2 b)
Reindeer gas
field/Devil
Creek gas
processing
plant (phase 1)
Apache
Energy/ Santos
Carnarvon
Committed
late 2011
40 PJ pa
US$744 m
(A$896 m)
Turrum
ExxonMobil/
BHP Billiton
Gippsland
Committed
2011
75 PJ pa
US$1.25 b
(A$1.5 b)
a Oil developments with gas production capacity

Source: ABARE 2009c
123
Table 4.22 Conventional gas projects at a less advanced stage of development, as of October 2009
Project
Company
Location
Status
Start up
Capacity
Capital
Expenditure
Basker, Manta
and Gummy gas
development
Roc Oil/Beach
Petroleum
Gippsland Basin
Feasibility study
under way
na
up to 46
PJ pa
na
Brunello/Julimar
(supply for
Wheatstone LNG
project)
Apache Energy/
KUFPEC
Carnarvon Basin
Feasibility study
under way
2013
na
US$1.84 b
(A$2.2 b)
Halyard
Apache Energy/
Santos
Carnarvon Basin
FEED studies
under way
2011
26 PJ pa
US$110 m
(A$133 m)
Kipper gas project

(stage 2)
Esso/BHP
Billiton/Santos
Gippsland Basin
Feasibility study
under way
2015
27 PJ pa
na
Macedon
BHP Billiton/
Apache Energy
Carnarvon Basin
Prefeasibility
study under way
2013
77 PJ pa
na
Source: ABARE 2009c
Table 4.23 CSG projects at various stages of development, as of October 2009
124
Project
Company
Location
Status
Start up
Capacity
Capital
Expenditure
RTA development
(Tallinga)
APLNG (Origin/
ConocoPhillips)
East of Roma,
Qld
Under
construction
2010
23 PJ pa
$260 m
Casino project
Metgasco
Casino, NSW
Feasibility study
under way
2010
18 PJ pa
na
Gloucester
project
AGL
Hunter Valley,
NSW
Feasibility study
under way
2010
1525 PJ
pa
$200 m
Camden Gas
Project
AGL
Camden, NSW
Planning approval
received
na
12 PJ pa
$35 m
Camden Gas
Project
AGL
Camden, NSW
Planning approval
under way
mid 2010
na
$100 m
Walloon gas field
BG Group
North of Roma,
Qld
Feasibility study
under way
2013
190 PJ pa
$230 m
Source: ABARE 2009c
Table 4.24 Tight gas projects at various stages of development, as of October 2009
Project
Company
Location
Status
Start up
Capacity
Warro gas field
Alcoa/ Latent
Petroleum
Perth Basin, WA
feasibility study
under way
2012
up to 58 PJ
Wellesley gas field
Empire Oil and Gas/

Allied Oil and Gas
Perth Basin, WA
feasibility study
under way
2010
na
Wombat field
Lakes Oil
Gippsland Basin, Vic
feasibility study
under way
na
na
Wakefield-1
Adelaide Energy/
Beach Petroleum Ltd
Cooper Basin, SA
feasibility study
under way
na
na
Source: ABARE
Table 4.25 Gas pipelines at various stages of development, as of October 2009

Project
Company
Location
Status
Start up
Capacity
Capital
Expenditure
Eastern Gas
Pipeline
Jemena
Wollongong
(NSW) to
Longford (Vic)
Committed
2010
20 PJ pa
$41 m
Moomba to
Sydney
APA Group
Moomba (SA) to
Sydney (NSW)
Under
construction
2010
na
$90 m
Queensland
Gas Pipeline
Jemena
Wallumbilla to
Gladstone (Qld)
550 km
Under
construction
2010
25 PJ pa
$112 m
C H APTE R 4: GAS
Project
Company
Location
Status
Start up
Capacity
Capital
Expenditure
South Gippsland
natural gas
pipeline
Multinet Gas
South Gippsland
(Vic) 250 km
from Lang Lang
to five regional
towns
Under
construction
2010
na
$50 m
Central
Queensland gas
pipeline
Arrow Energy/
AGL
Moranbah to
Gladstone (Qld)
440 km
Feasibility study
under way
na
2050 PJ pa
$475 m
Dampier
Bunbury
gas pipeline
expansion
(stage 5C)
DBP
Dampier to
Bunbury (WA)
Feasibility study
under way
na
100 PJ pa
$800 m
Gloucester
Coal Seam Gas
pipeline
Lucas Energy/
Molopo
Australia
Gloucester to
Hexham (NSW)
98 km
Feasibility study
under way
2010
1522 PJ pa
$5080 m
Lions Way
pipeline
Metgasco
Casino to
Ipswich (Qld)
145 km
EIS under way
na
18 PJ pa
$120 m
Newstead to
Bulla Park
Australian
Pipeline Assets
Newstead (Qld)
to Bulla Park
(NSW)
Feasibility study
under way
na
na
$500 m
Queensland
Hunter gas
pipeline
Hunter Gas
Pipeline
Wallumbilla (Qld) Govt approvals

to Newcastle
received
(NSW) 820 km
2012
85 PJ pa
$900 m
South West
Epic Energy
Queensland
pipeline
(stage 2 and 3)
Wallumbilla to
Ballera (Qld)
755 km
FEED study
under way
2012
77 PJ pa
$900 m
Surat Basin
to Gladstone
pipeline
Surat Basin to
Gladstone (Qld)
450 km
EIS under way
na
na
$600 m
Arrow Energy
Source: ABARE 2009c
Table 4.26 Gas-fired power stations at an advanced stage of development, as of October 2009
Project
Company
Location
Status
Start up
Capacity
Capital
Expenditure
Colongra gas
project
Delta Electricity
NSW
Under
construction
late 2009
660 MW
$500 m
Owen Springs
Power
and Water
Corporation
NT
Under
construction
2010
22 MW
$130 m
Mortlake
Stage 1
Origin Energy
Vic
Under
construction
2010
550 MW
$640 m
Kwinana Swift
Perth Energy
WA
Under
construction
mid-2010
120 MW
$120 m
Condamine
BG Group/ANZ
Infrastructure
Services
8 km E of
Miles, Qld
New project,
under
construction
2010
140 MW
$170 m
Darling Downs
Origin Energy
40 km W of
Dalby, Qld
New project,
under
construction
early 2010
630 MW
$951 m
(inc pipeline)
Conventional gas
CSG
Source: ABARE 2009e
125
Table 4.27 Gas-fired power stations at a less advanced stage of development, as of October 2009
Project
Company
Location
Status
Expected
Startup
New Capacity
Capital
Expenditure
ACT Peaker
AGL
8 km S of
Canberra, ACT
New project,
prefeasibility
study under
way
na
500 MW
$350450 m
Bamarang
stage 1
Delta Electricity
7 km SW of
Nowra, NSW
New project,
govt approval
received
na
300 MW
$156 m
Bamarang
stage 2
Delta Electricity
7 km SW of
Nowra, NSW
Expansion,
govt approval
received
na
100 MW
$400 m
Centauri 1
Eneabba Gas
8 km E of
Dongara, WA
New project,
govt approval
received, on
hold
na
168 MW
na
Hanging Rock
stage 1
Loran Energy
Products
20 km SW of
Moss Vale,
NSW
New project,
govt approval
under way
na
300 MW
$360 m
Hanging Rock
stage 2
Loran Energy
Products
20 km SW of
Moss Vale,
NSW
Expansion,
govt approval
under way
na
300 MW
$240 m
Leafs Gully
AGL
65 km SW of
Sydney, NSW
New project,
govt approval
received
2011
360 MW
$200 m
Marulan Gas
Turbine Facility
EnergyAustralia
40 km NE of
Goulburn, NSW
New project,
EIS under way
2010
350 MW
$280 m
Marulan Gas
Turbine Facility
stage 1
Delta Electricity
40 km NE of
Goulburn, NSW
New project,
EIS under way
201314
250350 MW
$280 m
Marulan Gas
Turbine Facility
stage 2
Delta Electricity
40 km NE of
Goulburn, NSW
Expansion, EIS
under way
201314
100150 MW
$235 m
Mortlake stage
2
Origin Energy
12 km W of
Mortlake, Vic
Expansion, EIS
completed
na
450 MW
na
Munmorah
rehabilitation
Delta Electricity
Munmorah,
NSW
Expansion, EIS
under way
201314
100 MW
$795 m
NQ Peaker
AGL
Townsville, Qld
New project,
prefeasibility
study under
way
2011
360 MW
$252324 m
Parkes
International
Power
Parkes, NSW
New project,
govt approval
received
na
120150 MW
$130 m
Pelican Point
stage 2
International
Power
20 km NW of
Adelaide, SA
Expansion,
prefeasibility
study under
way
na
300 MW
na
Port Kembla
Steelworks
Co-generation
plant
BlueScope
Steel
Port Kembla,
NSW
New project,
EIS under way
2012
220 MW
$750 m
SEQ1
AGL
Ipswich, Qld
New project,
prefeasibility
study under
way
2011
360 MW
$252324 m
SEQ2
AGL
Kogan, Qld
New project,
prefeasibility
study under
way
2012
1150 MW
$8051035 m
Conventional gas
126
C H APTE R 4: GAS
Project
Company
Location
Status
Expected
Startup
New Capacity
Capital
Expenditure
Shaw River
stage 1
Santos
30 km N of
Port Fairy, Vic
New project,
EIS under way
2012
500 MW
$800 m
(inc 105 km
pipeline from Pt
Campbell)
Shaw River
stages 2 & 3
Santos
30 km N of
Port Fairy, Vic
Expansion, EIS
under way
na
2x500 MW
na
Swanbank F
CS Energy
Ipswich, Qld
Expansion,
feasibility study
under way
2012
400 MW
na
Tallawara
stage 2
TRUenergy
Tallawarra
13 km S of
Wollongong,
NSW
Expansion, EIS
under way
2015
300450 MW
$500 m
Tomago
stage 1
Macquarie
Generation
25 km N of
Newcastle,
NSW
New project,
govt approval
received, on
hold
na
250 MW
$700 m
(inc Stage 13)
Tomago
stage 2
Macquarie
Generation
25 km N of
Newcastle,
NSW
Expansion,
govt approval
received, on
hold
na
250 MW
$700 m
(inc Stage 13)
Tomago
stage 3
Macquarie
Generation
25 km N of
Newcastle,
NSW
Expansion,
govt approval
received, on
hold
na
290 MW
$700 m
(inc Stage 13)
Valley Power
Station
Augmentation
project
Snowy Hydro
Latrobe Valley,
Vic
Expansion,
govt approval
received
2011
50100 MW
$80100 m
Weddell
stage 3
Power
and Water
Corporation
40 km SE of
Darwin, NT
Expansion,
feasibility study
under way
late 2011
30 MW
$86 m
Wellington
ERM Power
4 km N of
Wellington,
NSW
New project,
govt approval
received
2012
640 MW
$350 m
Braemar 3
ERM Power
40 km SW of
Dalby, Qld
Expansion,
govt approval
received
2011
450 MW
na
Narrabri 1
East Coast
Power
Narrabri, NSW
New project,
planning
approval under
way
2012
30 MW
$150 m
(inc stages
1 and 2)
Narrabri 2
East Coast
Power
Narrabri, NSW
New project,
planning
approval under
way
2013
180 MW
$150 m
(inc stages
1 and 2)
Richmond
Valley Power
station and
Casino Gas
project
Metgasco
East Casino,
NSW
New project,
EIS under way
2010
30 MW
$50 m
Spring Gully
stage 1
Origin Energy
80 km N of
Roma, Qld
New project,
govt approval
under way
na
500 MW
na
Spring Gully
stage 2
Origin Energy
80 km N of
Roma, Qld
Expansion,
govt approval
under way
na
500 MW
na
Wilga Park B
Eastern Star
Gas
Narrabri, NSW
Expansion,
planning
approval
received
na
30 MW
$42 m
127
CSG
Source: ABARE 2009e
Table 4.28 Conventional gas-based LNG projects at various stages of development, as of October 2009
128
Project
Company
Location
Status
Start up
Capacity
Capital
Expenditure
Pluto (train 1)
Woodside
Energy
Carnarvon
Basin
Under construction
late 2010
4.3 Mt LNG
$12 b (inc
site works for
train 2)
Gorgon LNG
Chevron/Shell/
ExxonMobil
Carnarvon
Basin
Under construction
2015
15 Mt LNG
$43 b
Bonaparte
(floating LNG)
Santos/GDF
Suez
Bonaparte
Basin
Prefeasibility study
under way
na
2 Mt LNG
na
Browse LNG
development
Woodside
Energy/BP/
BHP Billiton/
Chevron/Shell
Browse
Basin
Feasibility study
under way
na
Up to 15 Mt LNG
na
Ichthys gasfield
(incl Darwin
LNG plant)
Inpex/Total
Browse
Basin
FEED studies under

way
2015
8 Mt LNG
US$20 b
(A$24 b)
Pluto (train 2
and 3)
Woodside
Energy
Carnarvon
Basin
Feasibility study
under way
na
8.6 Mt LNG
na
Prelude (floating
LNG)
Shell
Browse
Basin
under way
2016
3.5 Mt LNG
na
Scarborough
Gas
ExxonMobil/
BHP Billiton
Carnarvon
Basin
under way
na
6 Mt LNG
na
Sunrise Gas
project
Woodside
Energy/
ConocoPhillips/
Shell/Osaka
Gas
Bonaparte
Basin
under way
na
5.3 Mt LNG
na
Timor Sea LNG

project
Methanol
Australia
Bonaparte
Basin
under way
na
3 Mt LNG
na
Wheatstone
LNG
Chevron/
Apache Energy/
KUFPEK
Carnarvon
Basin
FEED study under

way
2016
8.6 Mt LNG
(initially) 25 Mt LNG
(ultimately)
US$17.8 b
(A$21 b)
Source: ABARE 2009c
Table 4.29 CSG-based LNG projects at various stages of development, as of October 2009
Project
Company
Location
Status
Start up
Capacity
Capital
Expenditure
Fisherman's
Landing LNG
project
(Stage 1)
LNG Ltd/
Golar/Arrow
Energy
Gladstone,
Qld
environment
approval
granted
late 2012
1.5 Mt LNG
$500 m
Fisherman's
Landing LNG
project
(Stage 2)
LNG Ltd/
Golar/Arrow
Energy
Gladstone,
Qld
Feasibility
study under
way
na
1.5 Mt LNG
$200250 m
Curtis LNG
project
BG Group
Gladstone,
Qld
FEED study
under way
late 2013
7.4 Mt LNG
(12 Mt
ultimately)
$8 b (includes production
wells, LNG plant and
380km pipeline)
Gladstone LNG
project
Santos/
Petronas
Gladstone,
Qld
EIS under
way
2014
3.5 Mt LNG
(initially)
$7.7 b (includes
production wells, 1 LNG
train and 435 km pipeline)
Shell LNG
Shell
Gladstone,
Qld
feasibility
study under
way
2014
14 Mt LNG
(ultimately
16 Mt)
na
Australia Pacific
LNG
APLNG (Origin/
ConocoPhillips)
Gladstone,
Qld
feasibility
study under
way
201415
78 Mt LNG
(initially)
$35 b (based on 1416 Mt

LNG) (includes production
wells, 4 LNG trains and
400 km pipeline)
Source: ABARE 2009c
C H APTE R 4: GAS
4.5 References
August
ABARE, 2009b, Australian Commodities, vol. 16, no. 4,
December quarter, Canberra
ABARE, 2009c, Minerals and energy: Major development
ABARE, 2009d, Australian Commodity Statistics, Canberra,
December
ABARE, 2009e, Electricity generation: Major development
projects October 2009 listing, Canberra
Arrow Energy Ltd, 2009, Queensland Energy Conference,
Brisbane, February
AEMO (Australian Energy Market Operator), 2009a,
Gas market data, <http://www.aemo.com.au/>
AEMO, 2009b, Vision 2030 Update, May, <http://www.
aemo.com.au/planning/2030.html#>
Energy Market 2009, Australian Competition and Consumer
Commission, Melbourne, November
AER, 2008, State of the energy market 2008, ACCC,
Melbourne
APPEA (Australian Petroleum Production and
Exploration Association), 2009a, Canberra, October,
<http://www.appea.com.au/content/pdfs_docs_xls/
PolicyIndustryIssues/appeasubmission_to_infrastructure_
australia.pdf>
APPEA, 2009b, State of the Industry 2009, Canberra
Baker GL and Slater SM, 2009, Coal seam gas an
increasingly significant source of natural gas in eastern
Australia. The APPEA Journal 46 (1) 79100
Banks FE, 2000, Energy Economics: a Modern Introduction,
Kluwer Academic Publishers, Boston, Dordrecht and London
Barrett AG, Hinde AL and Kennard JM, 2004, Undiscovered
resource assessment methodologies and application to the
Bonaparte Basin. In: Ellis GK, Baillie PW and Munson TJ
(eds), Timor Sea Petroleum Geoscience, Proceedings of the
Timor Sea Symposium, Darwin, 1920 June 2003. Northern
Territory Geological Survey, Special Publication 1, 2004,
353372
BP, 2009, BP Statistical Review of World Energy, London,
June
Boreham CJ, Hope JM and Hartung-Kagi B, 2001,
Understanding source, distribution and preservation of
Australian natural gas: a geochemical perspective. The
APPEA Journal 41 (1) 523547
Boreham CJ, Edwards DS, Hope JM, Chen J and Hong Z,
2008, Carbon and hydrogen isotopes of neo-pentane for
biodegraded natural gas correlation. Organic Geochemistry
39, 14831486
Bradshaw MT, Bradshaw J, Murray A, Needham DJ, Spencer
L, Summons R, Wilmot J and Winn S, 1994, Petroleum
systems in west Australian basins. In Purcell, PG & RR
(Eds), The Sedimentary Basins of Western Australia.
Proceedings of the Petroleum Exploration Society of
Australia Symposium, Perth, 1994, 93118
Bradshaw MT, Foster CB, Fellows ME and Rowland DC,

1999, The Australian search for petroleum-patterns of
discovery. The APPEA Journal, 39 (1), 118
Branan N, 2008, Exploration and innovation: Geoscientists
push the frontiers of unconventional oil and gas, <http://
www.jsg.utexas.edu/news/feats/2008/exploration_
innovation.html>
Campbell I, 2009, An Overview of Tight Gas Resources in
Australia, PESA News, June/July issue
Chevron Australia, 2009, Gorgon its time is now, Perth,
<http://www.chevronaustralia.com/ourbusinesses/gorgon.
aspx>
Costain, 2009, The case for floating LNG production,
<http://costain-floating-lng.com/floating-lng.php>
DEWHA (Department of the Environment, Water, Heritage
and the Arts), 2009, Marine Protected Areas, <http://www.
environment.gov.au/coasts/mpa/index.html>
DNRME (Department of Natural Resources, Mines and
Energy), 2004, Coal seam gas water management study,
NRO0011, Report by Parsons Brinckerhoff Australia Pty Ltd
for Queensland Department of Natural Resources, Mines
and Energy, August 2004, <http://www.dme.qld.gov.au/
zone_files/None_Zoned_Files/csg_water_m_s_final.pdf>
Draper JJ, and Boreham CJ, 2006, Geological controls on
exploitable coal seam gas distribution in Queensland. The
APPEA Journal 46 (1) 343-366.
EIA (Energy Information Administration), 2009a, US Coal
bed methane production, Energy Information Administration,
Washington <http://www.eia.doe.gov>
EIA, 2009b, US Crude oil, natural gas and natural gas
liquids reserves, 2008. Energy Information Administration,
Washington, <http://www.eia.doe.gov/oil_gas/natural_gas/
data_publications/crude_oil_natural_gas_reserves/
cr.html?featureclicked=1&>
Frith D, 2004, Amity Oil remains optimistic. Prospect
Magazine, December 2003-February 2004, Western
Australia Department of Industry and Resources, page 6,
<http://www.dsd.wa.gov.au/documents/ProspectDec03Feb04(1).pdf>
Geoscience Australia, 2009, Oil and Gas Resources of
Australia 2008 Report <http://www.ga.gov.au/oceans/
pgga_OGRA.jsp>
Green P and Randall R, 2008, Queenslands coal seam gas
industry continues to brighten. Queensland Government
Mining Journal, March 2008, 4047
Hogan L, Thorpe S, Zheng S, Ho Trieu L, Fok G and
Donaldson K, 1996, Net Economic Benefits from Australias
Oil and Gas Resources: Exploration, Development and
Production, ABARE Research Report 96.4, Canberra
Balances, 2009 edition, OECD, Paris
IEA, 2009b, Natural gas information, 2009 edition, OECD,
Paris
IEA, 2009c, World Energy Outlook, OECD, Paris
IEA, 2008, Natural gas market review 2008, OECD, Paris
Jenkins CC, Maughan DM, Acton JH, Duckett A, Korn BE
and Teakle RP, 2003, The Jansz gas field, Carnarvon Basin,
Australia. The APPEA Journal 43(1), 303324
Kimber M and Moran A, 2004, More than Davy Lamps and
Canaries Coal Seam Gas in the 21st Century, Energy
129
Issues paper No. 34, Institute of Public Affairs, Melbourne

Lakes Oil, 2009, Tight Gas: A Lonely Journey, Lakes Oil, June
Longley IM, Buessenschuett C, Clydsdale L, Cubitt CJ, Davis
RC, Johnson MK, Marshall NM, Murray AP, Somerville R,
Spry TB and Thompson NB, 2002, The North West Shelf of
Australia a Woodside perspective. In: Keep M and Moss
SJ (editors), The Sedimentary Basins of Western Australia
3: Proceedings of the Petroleum Exploration Society of
Australia Symposium, Perth, 2788
Magoon LB and Dow WG, 1994, The petroleum system. In
Magoon LB and Dow WG (eds) The petroleum system from
source to trap. AAPG Memoir 60, AAPG, Tulsa, USA, 3-24
Makogon YF, Holditch SA and Makogon TY, 2007, Natural
gas-hydrates a potential energy source for the 21st
Century. Journal of Petroleum Science and Engineering 56
(2007) 1431
McCabe PJ, 1998, Energy resources Cornucopia or empty
barrel? American Association of Petroleum Geologists
Bulletin, V 82, no. 11, 21102134
McKirdy DM and Cook PJ, 1980, Organic Geochemistry of
Pliocene-Pleistocene Calcareous Sediments, DSDP Site
262, Timor Trough. American Association of Petroleum
Geologists Bulletin, Volume 64, 21182138
MH21Research Consortium, 2009, Research Consortium
for Methane Hydrate Resources in Japan, <http://www.
mh21japan.gr.jp/english/index.html>
Milkov AV, 2004, Global Estimates of Hydrate-bound Gas in
Marine Sediments: How Much is Really Out There, EarthScience Reviews, Vol. 66, 183197
130
Nippon GTL, 2009, Japan-GTL demonstration test project,

<http://www.nippon-gtl.or.jp/en/index.html>
Origin Energy, 2009, Waste and emissions water from coal
seam operations, <http://www.originenergy.com.au/1748/
Waste-and-emissions>
Burden on the Upstream Petroleum (Oil and Gas) Sector,

<http://www.pc.gov.au/projects/study/upstreampetroleum>
Purcell PG and Purcell RR, 1988, The North West Shelf,
Australia An Introduction. In PG & RR Purcell (editors)
Proceedings PESA North West Shelf Symposium, Perth 1988
Queensland Department of Mines and Energy, 2009,
Queensland Mining and Energy Bulletin, Brisbane, Autumn
Santos, 2009, 2009 Energy White Paper Public Submission,
May, <http://www.ret.gov.au/energy/Documents/ewp/pdf/
EWP%200046%20DP%20Submission%20-%20Santos.pdf>
Scott DJ, 2009, Gas hydrates: threat or opportunity?
Groningen Gas 50 <http://www.groningengas50.nl/nl/site/
conferentie/lezingen-17-juni>
Sharif A, 2007, Tight gas resources in Western Australia.
In Petroleum in Western Australia September 2007, 28-31.
Department of Mines and Petroleum, <http://www.dmp.
wa.gov.au/138_1491.aspx>
Silverman MR, Landon SM, Leaver JS, Mather TJ and
Berg E, 2007, No fuel like an old fuel: Proterozoic oil and
gas potential in the Beetaloo Basin, Northern Territory,
Australia. In Munson TJ and Ambrose GJ (eds) Proceedings
Central Australian Basins Symposium (CABS), Alice Springs,
August 2005. Northern Territory Geological Survey Special
Publication 2, <http://conferences.minerals.nt.gov.au/
cabsproceedings/Final_papers/P37_Silverman_et_al.pdf>
Swart PK, Wortmann UG, Mitterer RM, Malone MJ, Smart
PL, Feary DA and Hine AC, 2000, Hydrogen sulphide and
saline fluids in the continental margin of South Australia.
Geology, November 2000, v.28, no.11, 10391042
USGS, 2000, US Geological Survey World Petroleum
Assessment 2000 Description and Results. USGS Digital
data Series DDS-60
Pearce F, 2009, Ice on Fire. New Scientist 27 June, 3033
Vu TAT, Horsfield B and di Primio R, 2009, A preliminary

insight into the gas shale potential of the Amadeus and
Georgina basins, Australia. GeoS4 Report 20090401,
unpublished report to Geoscience Australia
Powell TG, 2001, Understanding Australias petroleum

resources, future production trends and the role of the
frontiers. The APPEA Journal, 41 (1), 273288
Walker TR, 2007, Deepwater and frontier exploration in

Australia historical perspectives, present environment and
likely future trends. The APPEA Journal, 47 (1), 115
Powell TG, 2004, Australias hydrocarbon resources where

will future production come from? The APPEA Journal, 44
(1), 729740
Williamson PE and Kroh F, 2007, The role of amplitude

versus offset technology in promotion offshore petroleum
exploration in Australia, The APPEA Journal, 47 (1),
161174
PricewaterhouseCoopers, 2007, Value and Growth in Coal

Seam Methane, Brisbane, October
Productivity Commission, 2009. Review of Regulatory
World Energy Council 2007, Survey of Energy Resources

2007, London, <http://www.worldenergy.org>
Chapter 5
Coal
5.1 Summary
Key messages

Australia is the fourth largest producer, the largest exporter, and has the fourth largest reserves
of coal in the world.
Coal accounts for around three quarters of Australias electricity generation, with coal-fired power
stations located in every mainland state.
Australia is well-placed to take advantage of increasing global demand for coal because of its
large low-cost, high quality reserves.
In export markets, coal remains the fastest growing fuel, driven by strong investment in coal-fired
power stations in China and other developing economies.
Within Australia, the share of coal in the energy mix is expected to decrease with the Renewable
Energy Target and a proposed emissions reduction target.
Government and industry initiatives are expected to play important roles in accelerating the
construction, demonstration and commercial deployment of large-scale integrated carbon capture
and storage (CCS) projects.
Continuing investment in infrastructure will be necessary to enable Australia to remain a major

player in the world coal market.
131
5.1.1 World coal resources and market
5.1.2 Australias coal resources
World coal production and consumption was

6.7billion tonnes (Gt) or around 133 000
petajoules (PJ) in 2008, and has grown at a
rate of 5.2 per cent per year since 2000.
Coal is Australias largest energy resource. It is low

cost and located close to areas of demand.
Global proved coal reserves (both black and brown)

were estimated at 826 Gt at the end of 2008.
Trade in black coal was 939 million tonnes
(Mt) in 2008, with thermal coal at 704 Mt and
metallurgical coal at 235 Mt.
Coal accounted for 26 per cent of world primary
energy consumption and 42 per cent of world
total electricity generation in 2007.
Global coal consumption slowed in 2008 but
coal remained the fastest-growing fossil fuel
with a 5 per cent growth in consumption: China
accounted for most of the growth.
In its reference case, the IEA projects world coal
demand to increase at an average annual rate of
1.9 per cent between 2007 and 2030. Non-OECD
demand is projected to increase at an average
annual rate of 2.8 per cent, while OECD demand
is projected to decline by 0.2 per cent per year.
The share of coal-fired electricity generation is
projected to increase from 42 per cent in 2007
to 45 per cent in 2030.
Australia has substantial reserves of both black

and brown coal, including high quality thermal
and metallurgical coal.
At end of 2008, Australias recoverable Economic
Demonstrated Resources (EDR) of black coal
amounted to 39.2 Gt, some 6 per cent of the
worlds recoverable EDR. In addition there are
another 8.3 Gt of Sub-economic Demonstrated
Resources (SDR).
At the 2008 rate of production of around 490Mt
per year the EDR are adequate to support about
90 years of production.
In addition to EDR and SDR there is 66.6 Gt of
recoverable Inferred Resources of black coal,
which require further exploration to delineate
their possible extent and determine their
economic status.
Queensland (56 per cent) and New South
Wales (40 per cent) have the largest share
of Australias black coal EDR with the Sydney
(35 per cent) and Bowen (34 per cent) basins
containing most of the recoverable black coal
EDR (figure 5.1).
132
Figure 5.1 Australias total recoverable resources of black and brown coal as at December 2008
Australia has about 25 per cent of the worlds

recoverable brown coal EDR. Australias
recoverable EDR of brown coal stand at 37.2 Gt,
with another 55.1 Gt in the SDR category and a
further 101.8 Gt in the Inferred category. Brown
coal EDR are sufficient for around 490 years at
current rates of production.
The potential for further discoveries of coal
resources in Australia is significant and is
probably over one trillion tonnes given that there
are over 25 sedimentary basins with identified
resources or coal occurrences and that there
are significant areas within these basins that
are under-explored.
At end of 2009, there were over 100 operating
coal mines and more than 35 proposed new
mines and expansions at various stages of
development ranging from scoping studies to
construction (figure 5.2).
Australias coal industry provides direct
employment for about 30 000 people.
5.1.3 Key factors in utilising Australias

coal resources
World demand for energy and the evolution of coal
prices over the period to 2030 will affect

the export market and, thus, Australias black
coal production.
Exports and domestic use of coal in electricity
generation are likely to be strongly influenced by:
- increasing electricity demand in non-OECD
economies associated with economic growth;
- global and domestic emissions reduction
policies;
- cost and rate of deployment of new low
emissions technologies (e.g. carbon capture
and storage);
- competition and substitution from other
forms of energy including gas, nuclear, wind,
geothermal and solar.
Adequacy and ease of access for exporters to
infrastructure, particularly port and rail.
Government and industry initiatives such as
the Global Carbon Capture Storage Institute,
the Carbon Capture Storage Flagships program,
and the Coal21 program are likely to play
an important role in the development and
commercial deployment of new low emissions
technologies in the outlook period.
C H A PTE R 5: COAL
120
130
140
150
10
DARWIN
750 km
20
BRISBANE
30
PERTH
ADELAIDE
SYDNEY
Coal resources
MELBOURNE
Black coal basin
Black coal operating mine
Brown coal basin
Brown coal operating mine

Black coal mineral deposit
40
Brown coal mineral deposit
133
HOBART
AERA 5.2
Figure 5.2 Australias operating black and brown coal mines as at December 2008
Coal is currently used to generate around three

quarters of Australias electricity, and in 200708
accounted for 40 per cent of total primary energy
consumption.
New South Wales and Queensland are the largest
producing states in Australia.
Australia exported 7183 PJ (252 Mt) of black coal
in 200708, of which around 54 per cent was
metallurgical coal and 46 per cent was thermal
coal. Exports were valued at $24.4 billion.
In the latest ABARE energy projections that include
the RET and a 5 per cent emissions reduction
target, Australias coal production is projected to
increase at an average annual rate of 1.8 per cent
to 13875PJ between 200708 and 202930.
250
100
200
80
150
60
100
40
50
20
Australian coal production has increased at an

and 2008 and domestic consumption has increased
at an average annual rate of 1.6 per cent over the
same period.
Over the same period, domestic coal consumption

is projected to decline at an average annual rate
of 0.8 per cent to around 1763 PJ in 202930.
TWh
5.1.4 Australias coal market
0
1999-00
2001-02
2003-04
2005-06
2007-08
2029-30
Year
(TWh)
Share of total
(%)
AERA 5.3
Figure 5.3 Australias coal-fired electricity generation to

202930
Source: ABARE 2010
Coals share of primary energy consumption

is projected to decline to about 23 per cent
in 202930.
Coals contribution to Australias electricity
generation is also projected to decrease to
around 43 per cent in 203930 (figure 5.3).
This decline in coals contribution to electricity
generation is expected to be taken up by gas and
to a lesser extent renewable energy sources.
Exports are projected to increase at an average
annual rate of 2.4 per cent to 12100PJ (450Mt)
in 202930. The increase in exports reflects
strong growth in coal demand in China, India
and other developing economies, a proportion of
which will be imported.

and world market
5.2.1 Definitions
134
Coal is a combustible sedimentary rock formed from

ancient vegetation, which has been consolidated
between other rock strata and transformed by the
combined effects of microbial action, pressure and
heat over a considerable time period. This process is
commonly called coalification. Coal occurs as layers
or seams, ranging in thickness from millimetres
to many tens of metres. It is composed mostly of
carbon (5098 per cent), hydrogen (313 per cent)
and oxygen, and smaller amounts of nitrogen, sulphur
and other elements. It also contains water and
particles of other inorganic matter. When burnt, coal
releases energy as heat which has a variety of uses.
Increase
in heat
and
pressure
Coal is broadly separated into brown and black which

have different thermal properties and uses.
Brown coal (lignite) has a low energy and high ash
content. Brown coal is unsuitable for export and is
used to generate electricity in power stations located
at or near the mine.
Black coal is harder than brown coal and has
a higher energy content. In Australia anthracite,
bituminous and sub-bituminous coals are called
black coal whereas in Europe, sub-bituminous coal
is referred to as brown coal (table 5.1) .
Thermal (steaming) coal is black coal that is used
mainly for generating electricity in power stations
where it is pulverised and burnt to heat steamgenerating boilers.
Metallurgical (coking) coal is black coal that is
suitable for making coke, which is used in the
production of pig iron. These coals must also have
low sulphur and phosphorus contents, and are
relatively scarce and attract a higher price than
thermal coals.
Coke is a porous solid composed mainly of carbon and
ash and is used in blast furnaces that produce iron.
Table 5.1 Coal classification terminology used in
Australia and Europe
Coal Rank
Australian
Terminology
European
Terminology
Anthracite
Black Coal
Black Coal
Bituminous Coal
Black Coal
Black Coal
Sub-bituminous
Coal
Black Coal
Brown Coal
Lignite
Brown Coal
Brown Coal
Increase
in heat
and
pressure
Increase
in heat
and
pressure
Increase in coal rank
Peat
Brown Coal
Sub Bituminous
Bituminous
AERA 5.4
Figure 5.4 Diagrammatic representation of the transformation of peat to brown and black coal (increasing coal rank)
Source: Australian Coal Association 2009
C H A PTE R 5: COAL
Coal has a wide range of chemical and physical

properties, reflecting its transformation by increasing
pressure and temperature from peat, the precursor
of coal, to the low rank (low organic maturity) lignite
or brown coal and to the more mature sub-bituminous
coals and ultimately to the harder, mature (higher
rank) black coals (figure 5.4). The lower rank subbituminous coals, with lower energy contents (lower
carbon and higher moisture contents), and lignite
are mainly used for power generation. Bituminous
coal (table 5.1) has a higher volatile content, lower
fixed carbon and therefore a lower energy content
than anthracite. It is used for power generation,
metallurgical applications, and general industrial
uses including cement manufacture. Anthracite,
the highest rank of the black coals, has the lowest
moisture content and the highest carbon and energy
content, and is used mainly by industry for steel and
cement manufacturing. Most Australian black coals
are of good quality with low ash and sulfur contents.
In the remainder of this chapter, coal is the sum of
brown and black coal unless otherwise specified.
All production referred to is saleable coal, rather than
raw, unless stated otherwise.
5.2.2 Coal supply chain

Figure 5.5 gives a schematic view of the coal industry
in Australia. Coal resources are delivered to domestic
and export markets through the successive activities
of exploration, development, production, processing
and transport.
Resources and Exploration
Exploration
Development and
Production
Export
market
Development
decision
Exploration
Coal reserves are discovered through exploration.
Modern coal exploration typically involves extensive
use of geophysical surveys, including 3D seismic
surveys aimed at providing detailed information on
the structures with the potential to affect longwall
operations, and drilling to determine coal quality
and thickness.
Mining
Coal is mined by both surface or opencut (or
opencast) and underground or deep mining
methods, depending on the local geology of the
deposit. Underground mining currently accounts for
about 60 per cent of world coal production but around
80 per cent of Australias coal is produced from
opencut mines. Opencut mining is only economic
when the coal seam(s) is near the surface. It has
the advantages of lower mining costs and it generally
recovers a higher proportion of the coal deposit
than underground mining, as most seams present
are exploited (90 per cent or more of the coal can
typically be recovered).
Technological advancements have made coal
mining today more productive than it has ever
been. Modern large opencut mines can cover many
square kilometres in area and commonly use large
draglines to remove the overburden and bucket wheel
excavators and conveyor belts to transport the coal.
Modern equipment and techniques allow opencut
mining to around 200 m. Many underground coal
mines in Australia use longwall mining methods,
Storage
World
electricity
market
Rail
Coal
ship
Crushing/
Washing
Undiscovered
resources
End Use Market
World
steel
market
Steel
works
Mine
Other
industry
Industry
Domestic
market
Conveyor
and Rail
Commercial
Electricity
generation
Residential
AERA 5.5
Figure 5.5 Australias coal supply chain

135
which enable extraction of most of the coal from a

seam using mechanical shearers. The mining face
can be up to 250 m long. Self-advancing, hydraulicpowered supports temporarily hold up the roof while
the coal is extracted. The roof over the area behind
the face, from which the coal has been removed, is
then allowed to collapse. Over 75 per cent of the coal
in the deposit may be extracted using this method
(World Coal Institute 2009).
Processing
Black coal may be used without any processing other
than crushing and screening to reduce the rock to
a useable and consistent size and remove some
contaminants. However, coal for export is generally
washed to remove pieces of rock or mineral which
may be present. This reduces ash and increases
overall energy content. Coal is separated into size
fractions, with coarse coal usually separated by
dense medium cyclones using a slurry of magnetite
and water. High density particles with concentrations

of mineral matter sink and particles with low mineral
matter concentrations float. Fine coal (minus 1 mm)
is usually cleaned by flotation, where the addition of
reagents enables the coal to attach to bubbles and
is separated from mineral matter. Coal is dewatered
after washing for efficient transport and use.
Transport
Australias coal is transported by conveyor or rail to
power stations for domestic electricity production
or via rail to coal export terminals from where it
is shipped in Panamax and Capesize vessels to
markets all over the world. In New South Wales,
coal for export is loaded at two ports: Port Kembla
(80km south of Sydney) and Newcastle (150 km
north of Sydney). Port Kembla serves the western
and southern coalfields. The port of Newcastle
serves mines in the Hunter Valley and Gunnedah
basins and is the worlds largest coal export port.
In Queensland, there are six coal loading terminals:
Table 5.2 Key coal statistics
Reserves
136
unit
Australia
200708
Australia
2008
OECD
2008
World
2008
Mt
76 400
352 095
826 001
Share of world
9.2
42.6
100
World ranking
No
Production (Raw Coal)
PJ
9431
9691
Mt
487
497
2127
6666
Share of world
7.4
31.9
100
World ranking
No
Annual growth in production 2000-08
3.3
0.7
5.2
PJ
2292
2309
47 461
133 215a
Mt
135
136
2329
6767a
Share of world
2.0
34.4
100
World ranking
No
10
40
21
26a
1.6
0.7
4.8
Electricity output
TWh
202
3947
8216a
Share of total
76
33
42a
Exports
Mt
252
261
385
939
Thermal coal
Mt
115
126
175
704
18
25
100

Annual growth in consumption 200008
Share of world
World ranking
No
Export value
A$b
8.4
14.4
Metallurgical coal
Mt
137
135
210
235
Share of world
57
89
100
World ranking
No
Export value
A$b
24.4
32.3
a 2007
Source: ABARE 2009a, b; IEA 2009a, b
C H A PTE R 5: COAL
Abbot Point, Dalrymple Bay, Hay Point, Gladstone

(RG Tanna and Barney Point) and Fisherman Island in
the port of Brisbane. The port of Brisbane services
the Clarence-Moreton Basin with the other five
terminals loading coal produced in the Bowen Basin.
Some coal has recently been exported from Kwinana
in Western Australia.
Brazil
Poland
Reserves and production

Over 70 countries worldwide have proven reserves
of coal totalling approximately 826 Gt (World Coal
Institute 2009), At current rates of production, these
reserves are estimated to last 122 years (BP 2009).
The United States has large reserves of both black
and brown coal, and accounts for 29 per cent of total
world coal reserves (figure 5.6). China and India also
hold large reserves of black coal, while China and the
Russian Federation hold large reserves of brown coal.
Australias reserves of black coal are the fifth largest
in the world, while its reserves of brown coal are the
fourth. Total coal reserves (based on EDR) in Australia
are 76.4 Gt, 9 per cent of the worlds total.
Ukraine
India
Australia
China
Russian Federation
United States
AERA 5.6
50
100
150
200
250
300
Gt
Figure 5.6 Black and brown coal reserves, major

countries, 2008
Note: BP defines black coal as anthracite and bituminous coal,
and brown coal as sub-bituminous and lignite
Source: BP 2009
Kazakhstan
Poland
Black coal
Germany
Brown coal
South Africa
Indonesia
Russian Federation
Australia
In 2008, world coal production totalled 6.7 Gt, of

which the largest producers, China, United States
and India accounted for 40 per cent, 16 per cent
and 8 per cent respectively. Australias production
of 497 Mt was the fourth largest and accounted for
about 7 per cent of world production (figure 5.7).
Of total coal production, black coal accounted for
86 per cent, while brown coal accounted for the
remaining 14 per cent (figure 5.8).
Brown coal
Kazakhstan
5.2.3 World coal market

Table 5.2 provides key statistics for the Australian coal
market within a global context. Australia is a major
producer and exporter of coal, having large, low-cost
reserves available. Coal also plays a dominant role in
Australias and the worlds energy mix.
Black coal
South Africa
India
137
United States
China
0
500
1000
1500
2000
2500
Mt
3000
AERA 5.7
Figure 5.7 Black and brown coal production, major

countries, 2008
Source: IEA 2009a

In 2008, world coal consumption was around
6.8Gt (IEA 2009a). The major use of coal is for
electricity generation (accounting for around 67 per
cent of consumption) and steel production (16 per
cent). Other uses include cement production and
chemical processing.
China is the largest coal consumer accounting for

around 41 per cent of world consumption in 2008
(figure 5.9). Chinas consumption has increased at
6000
5000
4000
Mt
Coal is an important energy source, reflecting its

wide availability and relatively low cost compared
with other fuels. In 2007 it accounted for 26 per cent
of global primary energy consumption, the second
largest share of world energy consumption after
oil. Around 42 per cent of the worlds electricity is
generated using coal and around 70 per cent of the
worlds steel production is from the coal-based blast
furnace process.
7000
3000
2000
1000
AERA 5.8
0
1973
1978
1983
1988
1993
1998
2003
2008
Year
Brown coal
Black coal
Figure 5.8 World production by coal type

Source: IEA 2009a
an average annual rate of 11 per cent since 2000

reflecting rapid expansions to its electricity generation
and steel making capacity. The United States and
India are also large coal consumers, accounting
for around 15 per cent and 9 per cent of world
consumption, respectively.
generation increased by 150 per cent between 2000

and 2007 (figure 5.13). Coal-fired generation capacity
has also increased strongly in non-OECD Asia
(excluding China) and OECD Asia Pacific (particularly
Japan and the Republic of Korea).
In the OECD, European coal consumption declined

by a third between 1971 and 2008 as policies have
encouraged the use of nuclear, gas and renewable
energy fuels for electricity generation.
Around 14 per cent of world coal production is traded

and almost all of it is black coal. Around 90 per cent
of this trade is seaborne, with a small amount of coal
traded via rail or truck.
Seaborne trade in thermal coal has increased on

average by around 8 per cent per year and seaborne
metallurgical coal trade has increased by nearly 3 per
cent per year since 2000 (ABARE 2009d).
In 2007, electricity generation in China and the

United States from coal-fired power plants was 2600
TWh and 2100 TWh, respectively (figure 5.12a).
In China, coal accounts for around 80 per cent of
electricity generation, while it is around 50 per cent
in the United States (figure 5.12b). Other countries
reliant on coal for over 90 per cent of their electricity
generation are South Africa and Poland. Australia
has a relatively high reliance on coal-fired electricity
generation, at around 75 per cent in 200708.
International trade in thermal coal is effectively

divided into two regional markets: the Atlantic and
Pacific markets. In the Pacific market the major
importers include Japan, the Republic of Korea,
Taiwan and China and the major exporters are
Australia, Indonesia and the Russian Federation
(from ports on its east coast). In the Atlantic market,
major importers are in the European Union (notably
the United Kingdom, Germany and Spain), the United
States and north Africa. Supply is largely sourced
from Colombia, South Africa, the Russian Federation
and the United States. Thermal coal is generally not
traded between the Atlantic and Pacific markets
7000
6000
5000
4000
Mt
138
Between 2000 and 2007, world coal-fired electricity

generation increased by around 38 per cent to
8200TWh. As a result, the share of coal-fired
electricity generation increased from 38 per cent
to 42 per cent of total electricity generation. The
principal driver was China where coal-fired electricity
Trade
3000
2000
1000
AERA 5.9
0
1972
1976
1980
1984
1988
1992
1996
2000
2004
2008
Year
China
Middle East
Russian Federation
Latin America
OECD Europe
Asia
(ex China)
Africa
Non-OECD Europe
OECD Asia
Pacific
OECD North
America
Figure 5.9 Black coal consumption by region

Note: from 1971 to 1989, the USSR is counted as the Russian Federation. Black coal is used as most regions consume only small amounts
of brown coal
Source: IEA 2009a
C H A PTE R 5: COAL
Australia
Japan
Indonesia
Republic of Korea
Russian Federation
Taiwan
China
India
United States
Germany
India
China
Japan
United Kingdom
Germany
United States
South Africa
Russian Federation
Australia
Italy
Republic of Korea
United States
Colombia
South Africa
Thermal
China
Canada
Metallurgical
Kazakhstan
Vietnam
AERA 5.10
50
100
150
200
250
300
Mt
Russian Federation
a) Electricity output
Thermal
Metallurgical
AERA 5.11
50
100
150
200
Mt
Figure 5.10 Thermal and metallurgical coal exports,

major countries, 2008
PolandThermal and metallurgical coal imports,

Figure 5.11
major countries,
0 2008
500
1000
1500
2000
2500
Source: IEA 2009a
Source: IEA 2009a
b) Share of total
China
China
United States
United States
India
India
Japan
Japan
Germany
Germany
South Africa
South Africa
Australia
Australia
Republic of Korea
Republic of Korea
Russian Federation
Russian Federation
Poland
Poland
0
500
1000
3000
TWh
1500
2000
2500
3000
TWh
20
40
60
Figure 5.12 World electricity generation from coal, major countries, 2007
80
100
AERA 5.12
Source: IEA 2009b

b) Share of total
China
United States
because
of the
freight costs that increase with

distance India
travelled.
Japan
Some Germany
metallurgical coal is traded across markets,
mostSouth
notably
exports from Australia to Brazil and
Africa
the European
Union. This reflects Australias position
Australia
in the world metallurgical coal market, in which it
Republic of Korea
accounts for almost 60 per cent of exports. The
Russian Federation
major metallurgical coal markets include Japan,
Poland
the European Union, India and the Republic of
0
20
40
60
80
Korea. After Australia,
the main
metallurgical
coal 100
%
exporters include the United States, Canada andAERA 5.12
the Russian Federation.
In 2008, Australia exported over 260 Mt of coal,
making it the worlds largest exporter (figure 5.10).
Exports of metallurgical coal were 135 Mt and
thermal coal 126 Mt. Australia is the worlds largest
exporter of metallurgical coal and the second
largest exporter of thermal coal (ABARE 2009c).
The worlds largest exporter of thermal coal in 2008
was Indonesia, which exported around 173 Mt.
In 2008, the worlds largest coal importer was Japan,
importing 186 Mt, of which 128 Mt was thermal
coal and 57 Mt was metallurgical coal (figure 5.11).

Japans imports account for around 20 per cent of
world imports. The Republic of Korea and Taiwan are
also large coal importers, accounting for around
11 per cent and 7 per cent, respectively, of world
coal imports.
Outlook for world coal market to 2030

In its reference case, the IEA projects world coal
demand to increase at an average annual rate of
1.9 per cent to 204 609 PJ in 2030 (table 5.3).
Coal demand as a share of total energy demand
is also projected to increase from 27 per cent in
2007 to 29 per cent in 2030. In the non-OECD, coal
consumption growth is projected to be particularly
strong at an average annual rate of 2.8 per cent. Much
of the growth is anticipated to come from China and
India where growth in electricity demand and steel
production is expected to underpin coal consumption.
However, in the OECD coal demand is projected to
decrease by around 5 per cent over the period 2007
to 2030. The outlook for coal consumption in the
European Union is particularly weak falling by 1
per cent per year reflecting an increase in market
139
45
8000
40
7000
35
6000
30
5000
25
4000
20
3000
15
2000
10
1000
TWh
9000
0
1971
1975
1980
1985
1990
1995
2000
2005
Year
Non-OECD Europe
OECD Asia Pacific
China
Africa
Non-OECD Asia (ex China)
OECD North America
Former Soviet Union
OECD Europe
Share (%)
AERA 5.13
Figure 5.13 World coal-fired electricity generation and coals share of total electricity generation by region
Source: IEA 2009b
140
share of gas, nuclear and renewable energy in the

electricity generation sector.
Global electricity generated from coal is projected to
increase at an average annual rate of 2.7 per cent
to 15 259 TWh in 2030 (table 5.4). However, coals
share of total electricity generation is projected to
decline in the OECD. This reflects the increased
competition from gas, nuclear and renewable
sources, especially with the potential advent of
policies to reduce emissions. However, coal-fired
electricity generation is expected to grow the fastest
in developing economies, where economic growth
will require the expansion of electricity generation
capacity.
Table 5.3 IEA world outlook for coal demand,
reference case
Under the IEAs 450 scenario predicated on

countries taking collective action to limit global
emissions to 450 ppm of CO2 the projected demand
growth for energy is reduced from 1.5 per cent per
year under the reference scenario to 0.8 per cent
per year between 2007 and 2030. Demand for coal
is significantly reduced compared with the reference
scenario and, after reaching a plateau in 2015,
coal demand is projected to decline to 2003 levels
by 2030. Coal demand in 2030 would be about 47
per cent lower in 2030 than in the reference case,
representing a decline of 0.9 per cent a year between
2007 and 2030 (IEA 2009c).
Table 5.4 IEA world outlook for coal electricity
generation, reference case
OECD
unit
2007
2030
OECD
PJ
48 483
46 180
Share of total electricity

generation
Share of total
36.4
22.6
Average annual growth

Non-OECD
-0.2
Non-OECD
PJ
84 825
158 429
Share of total
63.6
77.4
2.8
World
PJ
133 308
204 609
Share of total
100.0
100.0
1.9
Source: IEA 2009c

generation
unit
2007
2030
TWh
3947
4241
37.2
32.1
0.3
TWh
4258
11 019
41.6
52.3
4.2
TWh
8216
15 259

generation
41.6
44.5
2.7
World
Source: IEA 2009c
C H A PTE R 5: COAL
5.3 Australias coal resources

and market
5.3.1 Coal resources
Coal occurs and is mined in all Australian states.
Queensland and New South Wales have the largest
black coal resources and production whereas Victoria
hosts the largest resources and only production
of brown coal. Black coal has been mined in New
South Wales for more than 200 years and significant
production of brown coal began in Victoria in 1920s.
The most important black coals range in age from
Permian to Jurassic (from about 280 to 150 million
years ago) but the major resources are of Permian
age. Australias major deposits of brown coal are of
Tertiary age (5015 million years).
Australias principal black coal producing basins
are the Bowen (Queensland) and Sydney (New
South Wales) Basins. The Permian coal measures
in the Bowen Basin outcrop or lie beneath a thin
cover of younger sediments over an area of some
120000km2. Both metallurgical and thermal
coals occur in numerous coal-bearing sequences
throughout the basin.
Other basins with significant coal resources in

Queensland include the Permian-aged Galilee Basin
which lies to the west of the Bowen Basin and covers
an area of some 200 000 km2. There has been no
production to date but the Galilee Basin is emerging as
an area of considerable exploration interest for thermal
coal and is estimated to contain some 6 Gt of coal.
The southern half of the Bowen Basin is overlain
by the Jurassic-Cretaceous sediments of the broad
intra-cratonic Surat Basin which covers an area of
270 000km2 in Queensland and New South Wales.
The Surat Basin contains the Jurassic Walloon Coal
Measures which are a source of thermal coal and, more
recently, coal seam gas. Similarly, the Jurassic coals
of the Clarence-Moreton Basin and the Triassic coals
of the Ipswich Basin have provided coal for electricity
generation and industrial uses in the Brisbane region
and for export. Other coal basins in Queensland include:
Styx (Cretaceous), Mulgildie (Jurassic), Maryborough
(Cretaceous), Tarong (Triassic) and Laura (Jurassic).
The Sydney Basin is approximately 350 km long,
has an average of width of 100 km, and covers
some 35 000km2. The Sydney Basin is geologically
contemporaneous with the Bowen Basin but, unlike the
Bowen Basin, the Sydney Basin coal sequences are
141
Figure 5.14 Black coal resources in Australia

overlain by a thicker and more continuously preserved

cover of Triassic sediments. As a consequence,
development of coal resources has concentrated on
coal deposits near the basin margins where the cover
is thinner. The Sydney Basin passes to the north into
the Gunnedah Basin, which covers some 15 000 km2
and comprises rocks of Permian and Triassic age and
is estimated to contain more than 18 Gt of coal (both
metallurgical and thermal).
The Triassic-Jurassic age coals in the Clarence-Moreton
Basin in New South Wales are not mined. Thermal coal
is produced from the small (3000km2) Gloucester
Basin to the north of Newcastle. Substantial thermal
coal resources are known to occur in the Permian
Coorabin Coal Measures of the Oaklands Basin in the
Riverina District of New South Wales.
The sub-bituminous coal measures of Permian
age in the Canning Basin in Western Australia are
currently being investigated. In South Australia, subbituminous Triassic coal measures at Leigh Creek
are mined for electricity generation. Major resources

of sub-bituminous
coalblack
of Permian
age occur in the
a) Australian
coal EDR
(39
200
Mt)black South
Arckaringa a)
Basin
in central
Australia. The black
Australian
coal EDR
(39in200
coal measures
theMt)
Tasmania Basin are of subbituminous rank and Triassic in age.
Other
Australias
brown coal resources
are of Tertiary age
Clarencebasins
Other
Moreton
18% in the Gippsland Basin
and
are
dominated
by
those
Clarencebasins
Sydney
Basin
Basin
inMoreton
Victoria
where coal is 18%
mined to generateSydney
electricity.
5%
Basin
35%
Significant
brown
coal
resources
are
also
found
in
Basin
5%
35%
Surat
the Otway Basin
in Victoria where they are used
to
Basin
Surat at Anglesea. Large brown coal
produce electricity
7%
Basin
resources are also
7% known to occur in the Murray Basin
in western Victoria and South Australia, and in the
Bowen
North St Vincents Basin in South
Basin Australia. Brown coal
Bowen
34% in Western Australia
resources have been discovered
Basin
34%
in the Eucla Basin (e.g. Balladonia)
and in the onshore
part of the Bremer Basin (e.g. Scaddan). Minor brown
coal resources occur in Tasmania in the Longford
Basin and an occurrence of brown coal is known in
Queensland at Waterpark Creek north of Yeppoon.
b) Australian black coal total identified
b) resources
Australian (114
black100
coalMt)
total identified
a) Australian black coal EDR

(39 200 Mt)
142
Other
basins
18%
ClarenceMoreton
Basin
5%
resources (114 100 Mt)
Other
basins
Other
16%
basins
16%
Galilee
Basin
Galilee
5%
Basin
5%
Sydney
Basin
35%
Surat
Basin
7%
Sydney
Basin
Sydney
27%
Basin
27%
Arckaringa
Basin
Arckaringa
15%
Basin
15%
Gunnedah
Basin
Gunnedah
16%
Basin
16%
Bowen
Basin
34%
Bowen
Basin
Bowen
21%
Basin
21%
AERA 5.15
Figure 5.15 Australias black coal resources by major basin, 2008
AERA 5.15
b) Australian black coal total identified
Table 5.5 Australias

resources recoverable
(114 100 Mt) black and brown coal resources, December 2008
Recoverable Resources
Black Coal (Mt)
Black Coal (PJ)a
JORC Reserves (Mt)
39 200
883 400
13 400
8 300
163 100
66 600
1 468 900
2 515 400
13 400
Brown Coal (Mt)
Brown Coal (PJ)
JORC Reservesb (Mt)
Economic
37 200
362 000
4800
Sub-economic Arckaringa
Basin
Inferred
55 100
534 300
101 800
990 300
Brown Coal Total
Bowen
194
000
1 886 600
Economic
Sub-economic
Other
basins
16%
Inferred
Galilee
Basin
Black
Coal
5%
Total
15%
Sydney
114
100
Basin
27%
4800
Basin
Gunnedah
21%
Coal Total
308
100
4 402 000
18 200
Basin
a Includes estimates where operating
16% mines have no JORC reserves. b No brown coal JORC Reserves are available (Geoscience Australia
estimate)
AERA 5.15
C H A PTE R 5: COAL
Australias coal resources are published under the

McKelvey classification of Economic and Sub-economic
Demonstrated Resources and Inferred Resources
used by Geoscience Australia (table 5.5; Appendix D).
JORC (industry) reserves are also shown to provide
information on the proportion of Australias EDR that
is currently considered commercially viable by privately
owned companies.
Black coal
Recoverable economic demonstrated resources (EDR)
of black coal in 2008 were estimated at 39.2 Gt with
Queensland (56 per cent) and New South Wales (40
per cent) having the largest shares (figure 5.14). The
Sydney Basin (35 per cent) and Bowen Basin (34 per
cent) contain most of Australias recoverable EDR of
coal on both a tonnage and energy basis. These worldclass coal basins contain nearly half of Australias black
coal total resources and dominate production. There
are also significant black coal EDR in the Surat, Galilee
and Clarence-Moreton basins (figures 5.14 and 5.15).
Effectively all black coal EDR
Australia also has some 8.3 Gt of sub-economic

black coal resources, mostly within the Sydney
and Arckaringa basins. In addition there are very
substantial inferred black coal resources about
66.6 Gt, almost double the current EDR of black
coal lying mostly in the Gunnedah, Arckaringa,
Sydney, and Bowen basins (table 5.6). Renewed
exploration interest in the past decade has resulted
in a significant increase in inferred coal resources,
notably in the Gunnedah and Galilee Basins.
Table 5.6 Recoverable black coal resources by basin
as at 31 December 2008
60
50
000 million tonnes
is accessible. The resource life of the EDR of 39.2Gt

is about 90 years at current rates of production. The
black coal JORC reserves are 13.4 Gt or 34 per cent of
EDR. Included in the 13.4 Gt are Geoscience Australia
estimates of reserves at some operating mines for
which no JORC reserves have been reported. This
constituted 1.9 Gt or about 14 per cent of JORC
reserves. BHP Billiton, Rio Tinto and Xstrata Coal
manage about 57 per cent of JORC reserves in
Australia. The resource life of the JORC reserves of
13.4 Gt is 31 years at current rates of production.
Category
Basin
Mt
PJ
40
EDR
Sydney
13 800
315 500
30
EDR
Bowen
13 400
322 100
EDR
Surat
2900
63 800
EDR
ClarenceMoreton
2000
40 900
EDR
Galilee
1700
33 300
EDR
Other
5400
107 900
39 200
883 400
20
10
AERA 5.16
0
1976
1980
1984
1988
1992
1996
2000
2004
2008
Year
Total EDR
Figure 5.16 Black coal economic demonstrated

resources, 1976 to 2008
SDR
Sydney
3000
67 700
SDR
Bowen
500
12 100
450
SDR
Ipswich
340
7600
400
SDR
Collie
300
5800
350
SDR
Arckaringa
3800
63 200
300
SDR
Other
360
6700
8300
163 100
350
300
250
200
250
150
200
50
AERA 5.17
0
1976
1980
1984
1988
1992
1996
2000
2004
2008
Year
Resource life
(years)
Production
(Mt) raw
Figure 5.17 Black coal resource life and production,

1976 to 2008
Total SDR
INF
Sydney
12 600
286 600
100
INF
Bowen
10 600
253 400
50
INF
Galilee
4500
89 700
INF
Gunnedah
17 700
461 300
INF
Arckaringa
13 900
233 400
INF
Other
7300
144 500
Total INF
66 600
1 468 900
Total EDR + SDR + INF
114 100
2 515 400
150
100
Production (Mt)
143
The changes in Australias black coal resources with

time are shown in figure 5.16. The steep increase
in EDR in 1987 is due to a major reassessment of
New South Wales coal resources in 1986 by the then
New South Wales Department of Mineral Resources
and the Joint Coal Board. The decline in EDR since
1998 results from industry re-estimating reserves
and mineral resources more conservatively in order
to comply with the requirements of the JORC Code as
well as increased mine production.
Major increases in production over the past 40 years
has seen the resource life of Australias black coal
resources fall from about 300 years to around 90
years (figure 5.17).
Brown coal
Category
Basin
Mt
PJ
EDR
Gippsland
36 800
356 900
EDR
Otway
400
5100
EDR
Murray
EDR
Other
37 200
362 000
47 600
462 000
Total EDR
SDR
Gippsland
SDR
Otway
800
8900
SDR
Murray
3500
34 500
SDR
Other
3200
28 900
55 100
534 300
Total SDR
Recoverable EDR of brown coal for 2008 were

estimated to be 37.2 Gt, all located in Victoria and
about 93 per cent of the total EDR is in the La Trobe
Valley (figure 5.18). The Gippsland Basin contains 99
per cent of the total recoverable brown coal EDR of
Australia. Approximately 86 per cent of brown coal
EDR is accessible. Quarantined resources include
the APM Mill site that has a 50 year mining ban
that commenced in 1980 and coal that is under the
Morwell township and the Holey Plains State Park.
120
Table 5.7 Recoverable brown coal resources by basin

as at 31 December 2008
INF
Gippsland
76 400
740 900
INF
Otway
7300
76 700
INF
Murray
15 300
148 400
INF
Other
2800
24 300
Total INF
101 800
990 300
Total EDR + SDR + INF
194 100
1 886 600
130
140
144
150
DARWIN
750 km
10
20
BRISBANE
NORTHERN ST
VINCENT BASIN
PERTH
BREMER BASIN
Brown coal
EUCLA BASIN
SDR 2592
IFU 3243
SDR 2181
IFU 5336
Economic Demonstrated Resource

(EDR in PJ)
Sub-economic Demonstrated Resource
(SDR in PJ)
Inferred Undifferentiated (IFU in PJ)
Brown coal basin
SDR 23 305
IFU 9006
SDR 34 497
IFU 148 358
ADELAIDE
OTWAY BASIN
30
MURRAY BASIN
MELBOURNE
EDR 5086
SDR 8887
IFU 76 698
SYDNEY
MOE SWAMP
IFU 6748
GIPPSLAND BASIN
EDR 356 919
SDR 462 027
IFU 740 880
LONGFORD BASIN
SDR 807
HOBART
40
AERA 5.18
Figure 5.18 Brown coal resources in Australia

C H A PTE R 5: COAL
The resource life of accessible EDR of 32.2Gt is

about 490 years. JORC reserve estimates are not
available for brown coal resources. Geoscience
Australia estimates from published information that
the reserves at operating mines are about 4.8 Gt,
and have a resource life of about 70 years.
In addition to the EDR of brown coal there are larger
sub-economic brown coal resources in the Gippsland
Basin, and even larger inferred resources of brown
coal, predominantly contained in the Gippsland,
Murray and Otway basins (figure 5.18; table 5.7).
Australias EDR of brown coal have remained relatively
constant since 1976 (figure 5.19). A doubling of
production over the past 40 years has resulted in
a halving of the resource life to around 490 years.
past five years annual coal exploration expenditure

has increased from $84.7 million to $276.3 million
in 2008. The bulk of the exploration is focussed
in Queensland (59 per cent) and New South Wales
(34 per cent of the total) in 2008. The remaining
expenditure occurred in South Australia, Western
Australia, Tasmania and Victoria. In 2008 coal
exploration expenditure contributed 10.6 per cent to
the total mineral exploration expenditure in Australia.
The last sustained period of high levels of coal
exploration was during the early 1980s in response to
world energy shocks and a broadly based resources
boom and coincided with the major expansion of
Australias coal resources, particularly those in the
Bowen Basin.
400
Coal exploration
350
Australia is currently experiencing record levels of

coal exploration. Data published by the Australian
Bureau of Statistics (ABS 2009) show that over the
300
Mt
250
45
200
40
150
30
100
25
50
20
AERA 5.21
0
1960-61
15
1969-70
1978-79
1987-88
1996-97
2007-08
Year
10
5
AERA 5.19
0
1976
1980
1984
1988
1992
1996
2000
2004
2008
Year
Other states
Victoria
Queensland
New South Wales
Figure 5.19 Brown coal economic demonstrated

resources, 1976 to 2008
Figure 5.21 Production of saleable coal by state
Source: ABARE 2009d
Note: Victoria is brown coal and the other states black coal
350
300
60
2500
400
50
2000
Brown coal
40
Black coal
1500
Mt
PJ
250
30
200
1000
150
500
20
10
100
0
1960-61
50
0
1960-61
000 million tonnes
35
AERA 5.22
1969-70
1978-79
1978-79
1987-88
1996-97
2007-08
Year
1996-97
0
2007-08
Year
AERA 5.20
1969-70
1987-88
Coal consumption
(PJ)
Share of total
energy (%)
Figure 5.20 Australias production of saleable black and

brown coal
Figure 5.22 Australian coal consumption and share of

total primary energy
Source: ABARE 2009d
Source: ABARE 2009a
145
2500
5.3.2 Coal market

Production
2000
Australias combined production of saleable black

and brown of coal is shown in figure 5.20. Raw coal
production in 200708 was estimated to be around
487 Mt (9431 PJ) which represents an average
annual increase of 5 per cent from 196061. Black
coal accounted for 86 per cent or 421 Mt (8722 PJ).
Queensland and New South Wales accounted for the
majority of this production: 57 per cent and 41 per
cent respectively.
PJ
1500
1000
500
0
1973-74
AERA 5.16
1980-81
1990-91
2000-01
2007-08
Year
Other
Manufacturing
Electricity
Figure 5.23 Australian coal consumption by sector

Source: ABARE 2009a
100
160
80
120
60
80
40
40
20
TWh
200
146
AERA 5.24
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Year
(TWh)
Share of total
electricity (%)
Figure 5.24 Australian use and share of coal in thermal

Source: IEA 2009b
Brown coal production in 200708 was estimated to

be around 67 Mt (709 PJ), all from Victoria.
Figure 5.21 shows the breakdown of coal production
by state. The majority of Queenslands coal production
is in the Bowen Basin, around 150200km inland
from the towns of Mackay and Gladstone. There are
also a number of mines in the Clarence-Moreton
Basin, around 50100 km west of Brisbane, and in
the Tarong, Callide and Surat Basins.
In New South Wales, the majority of coal production
is in the Hunter Valley, extending 30100 km
northwest of Newcastle. There are also a number of
mines in the Gunnedah Basin (200 km northwest of
Newcastle) and mines to the immediate south and
west of Sydney. Relatively small amounts of coal are
also produced in South Australia, Western Australia
and Tasmania.

In 200708, Australias coal consumption was
around 2292 PJ (135 Mt). Since 196061,
Australias coal consumption has increased at an
average annual rate of 5 per cent (figure 5.22).
The increase in consumption (figure 5.23) reflects
increased demand for electricity associated with
economic and population growth. Much of this
increased electricity demand has been met through
coal-fired generation.
In 200708, around 75 per cent of Australias
electricity was generated from coal. Coals share
of electricity generation has ranged between 60
and 80 per cent since the 1960s (figure 5.24). The
use of coal for electricity generation reflects its low
cost relative to other fuels and the large resource
base which is located close to electricity demand
centres in south eastern Australia. Ready availability
of low cost coal has underpinned relatively low cost
electricity (by global standards) in mainland Australia.
300
250
Mt
200
Metallurgical
Thermal
150
100
50
AERA 5.25
0
1980-81 1984-85 1988-89 1992-93 1996-97 2000-01 2004-05 2008-09
Year
Figure 5.25 Australias exports of thermal and

metallurgical coal
Source: ABARE 2009d
Trade
In 200809, Australia exported around 65 per cent
of its saleable black coal production. All brown coal
production was consumed domestically. The majority
of Australias exported coal is produced in New South
Wales and Queensland. Recently small amounts of coal
C H A PTE R 5: COAL
a) Thermal
40
35
120
30
100
25
80
20
60
15
40
10
20
6000
3000
0
1988-89
1992-93
1996-97
2000-01
2004-05
a) Black coal
PJ
140
9000
2008-09 A$b
Mt
160
2008-09
1973-74
1980-81
Year
b) Metallurgical
20
12
80
10
60
8
6
40
20
0
1996-97
2000-01
2004-05
2007-08
400
300
200
100
2008-09
1973-74
1980-81
Year
Volume (Mt)
2000-01
500
PJ
100
b) Brown coal
600
14
1992-93
2007-08
700
16
120
Mt
800
18
140
1988-89
2000-01
Year
2008-09 A$b
160
1990-91
1990-91
Year
Value (A$b)
Exports
Production
AERA 5.26
Consumption
AERA 5.27
Figure 5.26 Australias export volume and value of

thermal and metallurgical coal
Figure 5.27 Australias exports and consumption

of black and brown coal
Source: ABARE 2009d
Source: ABARE 2009a
have been exported from Kwinana in Western Australia.

Newcastle is the largest port and in 200809,
coal exports from Newcastle totalled around 100 Mt.
Fiscal Year (JFY) 2008 (April 2008March 2009), when

coal prices more than doubled. With contract prices
for JFY 2009 having been settled at considerably lower
levels, export earnings for 200910 are expected to
recede from these record levels.
In 200809, Australia exported around 261 Mt of

coal 135 Mt of metallurgical coal and 126 Mt of
thermal coal (figure 5.25). Australias major export
markets for metallurgical coal are Japan, India,
the European Union, the Republic of Korea and
Taiwan. Japan, the Republic of Korea and Taiwan are
Australias major export markets for thermal coal.
Coal exports have increased over the past 30 years
underpinned by strong growth in demand from these
major trading partners.
The value of Australias coal exports in 200809 was
a record $55 billion, an increase of 130 per cent from
200708. The value of thermal coal exports increased
by 130 per cent to $37 billion and metallurgical coal
exports increased 125 per cent to $18 billion (figure
5.26). The significant increase in export values, in
part, reflects record contract prices for Japanese
Supply-demand balance
Australias black coal production has significantly
exceeded domestic consumption and the surplus has
been sold into international markets (figure 5.27a).
Growing global demand for both good quality thermal
and metallurgical coal has led to increased coal
production and exports. Australias substantial high
quality coal resources and reputation as a country
with low sovereign and security risks has encouraged
important investments in the coal industry by
consumers in major import markets such as Japan,
the Republic of Korea, and increasingly China.
In contrast, all of Australias brown coal production is
consumed domestically (figure 5.27b). Production is
147
Table 5.8 Coal mining projects recently completed, as at October 2009
148
Project
Location
Start up
Capacity
Capital
Expenditure
Lake Lindsay
Qld
2009
4 Mt coking and thermal
US$726 m
Abel underground
NSW
2008
4.5 Mt ROM semi-soft coking and thermal
$84 m
Dawson project
Qld
2008
5.7 Mt coking and thermal
$1.1 b
Glendell opencut
NSW
2008
2 Mt thermal
$123 m
Rocglen (Belmont) opencut
NSW
2008
1.5 Mt thermal
$35 m
Sonoma coal project
Qld
2008
1.8 Mt coking and 0.2 Mt thermal
$200 m
Vermont Coal Project
Qld
2008
4 Mt coking
$264 m
Ashton longwall
NSW
2007
3 Mt coking and thermal
$150 m
Boggabri opencut
NSW
2007
1.5 Mt thermal
$35 m
Curragh North
Qld
2007
2.4 Mt coking
$360 m
Ensham Central
Qld
2007
3 Mt thermal
$100 m
Isaac Plains
Qld
2007
1.6 Mt coking
$66 m
Kogan Creek opencut
Qld
2007
2.8 Mt thermal
$80 m
New Acland opencut
Qld
2007
1.5 Mt thermal
$60 m
Newpac longwall
NSW
2007
4 Mt coking
$75 m
North Wambo longwall
NSW
2007
3 Mt thermal
$101 m
Poitrel
Qld
2007
3 Mt coking
$330 m
Wilkie Creek
Qld
2007
0.6 Mt thermal
$15 m
Tarawonga opencut
NSW
2007
1.3 Mt thermal
$38 m
Wilpinjong opencut
NSW
2007
3 Mt thermal
$123 m
Source: ABARE 2009e
Table 5.9 Coal infrastructure projects recently completed, as at October 2009

Project
Location
Start up
Capacity increase
Capital
Expenditure
Abbot Point Coal Terminal X21 expansion
Qld
2007
6 Mtpa (new capacity 21 Mtpa)
$116 m
Blackwater to Burngrove duplication (rail)
Qld
2007
na
$43 m
Bluff to Blackwater Duplication (rail)
Qld
2007
na
$58.5 m
Hay Point Coal Terminal Phase 2
Qld
2007
$70 m
Kooragang Island Coal Terminal
NSW
2007
$170 m
Broadlea to Wotonga duplication (rail)
Qld
2008
na
$70 m
Callemondah to RG Tanna (rail)
Qld
2008
na
$40 m
Dalyrmple Bay Coal Terminal 7X expansion

Phase 1
Qld
2008
$530 m
RG Tanna Coal Terminal expansion
Qld
2008
$800 m
Abbot Point Coal Terminal X25 expansion
Qld
2009
na
$95 m
Dalrymple Bay Coal Terminal 7X expansion

project Phase 2/3
Qld
2009
$679 m
Grantleigh to Tunnel (rail)
Qld
2009
na
$49 m
Jilalan Rail Yard Upgrade
Qld
2009
na
$500 m
Stanwell -Wycarbah upgrade (rail)
Qld
2009
na
$72 m
Vermont Rail Spur and Balloon Loop
Qld
2009
na
$70 m
Source: ABARE 2009e
C H A PTE R 5: COAL
closely matched to consumption at adjacent power

stations, a link sometimes referred to as mine-mouth
power generation. After growing strongly during the
early 1990s and then levelling off in the first half of
the 2000s, brown coal production has fallen in recent
years. The decline reflects competition from other
fuels in Victoria, particularly gas.

The majority of Australias coal consumption occurs

in New South Wales, Queensland and Victoria (figure
5.28). In terms of tonnage, Victoria is responsible
for just under half of Australias coal consumption.
However, in energy terms, New South Wales and
Queensland account for nearly 70 per cent. The
difference between weight and energy content
across the states reflects the low rank of coal used
in Victoria, where a tonne of coal contains around a
third of the energy content of that consumed in New
South Wales and Queensland.
Growth will be in increased exports which are

projected to increase by 2.4 per cent per year
to 202930.
Australias coal production is projected to

increase at an average annual rate of 1.8 per
cent to about 13 875 PJ in 202930.
Domestic coal consumption is projected to

decrease at an average annual rate of 0.8 per
cent to 1763 PJ in 202930.
Coals share of domestic electricity generation is
projected to decline from around 75 per cent in
200708 to 43 per cent in 202930.
Gas and renewable energy sources (especially
wind) are projected to make a greater contribution
to electricity generation.
200
The development of cost-effective lower

emissions coal technologies, notably carbon
capture and storage, will be critical to maintaining
coals position in electricity generation.
160
Million tonnes
The key messages from the outlook to 2030 are:
120
80
Future growth of Australias coal production and

exports depend on global economic growth,
carbon reduction policies, coal prices, adequacy
of coal handling infrastructure, and local water
and environmental issues.
40
0
New South Wales
Queensland
Production
Victoria
Other
Consumption
AERA 5.28
Figure 5.28 Production and consumption of saleable

coal by state, 200708
Note: Victoria produces and consumes only brown coal. All other
states produce and consume black coal
Source: ABARE 2009d
Major development projects

recently completed
The recent completion of numerous coal mine
and infrastructure projects has underpinned the
expansion of Australias coal exports. Over the past
three years, 20 mine projects have been completed
with a production capacity of 54 Mt and an estimated
capital expenditure of over $4.3 billion (table 5.8).
Coal infrastructure projects (essentially upgrades and
expansions of port and rail facilities) completed over
the past three years are shown in table 5.9. These
projects, at an estimated capital cost of $3.4 billion,
have increased rail and port capacity by around 80Mt
per year. The expansion in mine and infrastructure
capacity has been necessary to support the increase
of Australias coal exports from 233 Mt in 2005 to an
estimated 260 Mt in 2009.

The key factors influencing the future development of
Australias coal industry include:
Global economic growth and demand for coal
are projected to maintain coals position as
the fastest-growing energy source except for
some renewable energy sources. Under the IEA
reference scenario coal is projected to grow at an
annual rate of 1.9 per cent to 2030 (IEA 2009c).
Most (97 per cent) of the projected growth in
demand is expected to come from non-OECD
countries, mostly in Asia. More than 75 per cent
of the increase is expected to be for thermal coal
for power generation.
Australias ability to meet the increased demand
for coal exports will require matching expansion
of coal infrastructure, including rail and port
(coal loading) capacity.
Global growth in coal demand is likely to be
influenced by global policies on carbon emissions.
Domestic coal consumption and coals share
of electricity generation is projected to decline
from its current very high level (75 per cent) as
a consequence of policies to decrease national
149
greenhouse emissions, including the Renewable

Energy Target and emission reduction targets
that will encourage growth of renewable and other
lower-emissions energy sources.
Coal-fired electricity generation will be replaced by

gas and, to a lesser extent, renewable energy.
The future position of coal in electricity generation
will be strongly influenced by the cost of electricity
production from renewable energy sources
compared with the cost of new low-emission

coal technologies.
Government and industry initiatives such as the
Global Carbon Capture Storage Institute, the
Carbon Capture Storage Flagships program, and
the Coal21 program are likely to play an important
role in the development and commercial
deployment of new low-emission technologies in
the outlook period.
Box 5.1 Evolution of flexible pricing in coal markets

Historically, seaborne trade of thermal coal has
operated under long-term contracts which provide
security for both suppliers and consumers. Contract
terms defined the annual quantities to be purchased,
including buyer and seller options as well as fixed
prices for each year. Contracts usually contained a
provision for price changes proportionate to changes
in input cost indices. By the 1990s, a trend toward
long-term contracts with annual price review became
more common. These new contract arrangements
allowed prices to be revised through annual
negotiation of a benchmark price or through the use
of spot price indices. The shift toward provisions for
an annual price change in coal contracts reflected
coal suppliers and consumers preferences for
security while also ensuring prices reflected market
fundamentals.
150
As trade in thermal coal has increased over the past

30 years, so has the proportion of trade occurring
on spot markets. In 1990, Australian thermal coal
sold on spot markets is estimated to have accounted
for around 17 per cent of total trade. By 2007, this
proportion is estimated to have increased to 30 per
cent. Although long-term contracts still play a major
role in the thermal coal market, spot sales have
increased in importance.
Thermal coal sold on spot markets is subject to
contracts which have a similar content to long-term
contracts but cover a much shorter timeframe.
Similar to long-term contracts, spot contracts specify
agreement on each partys rights and obligations in
the loading, travel, delivery, testing, weighing and
rejection processes. Spot sales may be for a single
cargo, part cargoes or for a series of cargoes. Spot coal
transactions can occur in a variety of forums including
established trading platforms such as globalCOAL,
through traders or between producers and consumers.
Trading of coal as a commodity on spot markets
has been further enhanced by the introduction of a
number of coal indices that define and standardise
provenance, quality, place of delivery as well as
other conditions. The Barlow Jonker Index (BJI), the
McCloskey Newcastle FOB and the globalCOAL index
are examples of major indicators of the spot market
price in the Asia Pacific market.
A significant change to the thermal coal market

occurred in 2000 with the deregulation of the
European electricity market. Deregulation removed
the past certainty afforded by fixed coal and
electricity prices and introduced competition between
power generators for market share, resulting in
volatility in both electricity and thermal coal prices.
As a consequence, EU power generators have shifted
their coal purchases from fixed long-term contracts to
a spot basis.
The majority of seaborne metallurgical coal imports
into Japan, the Republic of Korea and the European
Union, still occur under long term contracts with
annual price negotiations. The move towards flexible
pricing has been much slower compared with changes
in the thermal coal market. This is a result of two
factors. Firstly, steel mills in Japan and the European
Union place significant value on sourcing coal from
particular mines, which limits their ability to purchase
large proportions of coal requirements from the spot
market. In turn this limits the size of the coking coal
spot market which makes calculating an accurate
price index more complicated. The preference of a
number of Japanese and European steel mills to
purchase coal from specific mines reflects the set
up of blast furnaces which are designed to burn a
very specific blend. Secondly, a number of steel mills
receive annually fixed prices for their steel and hence
prefer the stability of fixed input prices.
Over the next 20 years, Chinese and Indian steel
mills are expected to increase their share of
metallurgical coal imports. Generally, Chinese and
Indian steel mills have greater flexibility in the coal
blend they can use and hence would be more willing
to purchase a coal via a spot or tender process.
In China, variations in domestic metallurgical coal
production mean that import requirements may
change from year to year making it difficult for
Chinese steel mills to commit to large tonnage,
long term agreements. These factors may support
an increase in metallurgical coal spot trade which
in turn could increase the liquidity of a spot market
and enable the development of metallurgical coal
spot indices.
Source: Metal Bulletin 2008; Ekawan et al. 2006
C H A PTE R 5: COAL
Global growth and demand for coal

In the IEA reference scenario, world electricity
demand is expected to grow at an annual rate of
2.4 per cent to 2030 and underpin strong demand
for coal, maintaining its position as the fastestgrowing energy source except for some renewable
energy sources. Coal demand is expected to grow at
an annual rate of 1.9 per cent in the period to 2030.
Most (97 per cent) of the projected growth in demand
is expected to come from non-OECD countries,
notably those in Asia. Coal consumption in OECD
countries is projected to fall at an annual rate of 0.2
per cent to 2030, continuing a long-term decline in
the OECD share of global coal consumption. More
than 75 per cent of the increase in global coal
consumption is expected to be for thermal coal for
power generation with the bulk of demand growth
from China and India (IEA 2009c).
In the IEAs 450 scenario global coal demand
declines by 0.9 per cent a year to 2030 and is 47 per
cent lower in 2030 than under the reference scenario
(IEA 2009c). This reduced global coal demand is
expected to flow through to reduced production by
exporting countries with almost three-quarters of the
reduction in production borne by non-OECD countries.
Global coal trade is expected to continue to grow
even under the 450 scenario but is projected to be
53 per cent below the reference scenario. China
is expected to account for more than half of the
projected reduction in coal demand as it diversifies
electricity generation away from coal. Indias net coal
imports are projected to double by 2020 compared
with 2007, although this level of imports is down
almost 60 per cent compared with the reference
scenario. Australia is projected to remain the worlds
largest coal exporter with exports equivalent to 2005
volumes (IEA 2009c).
This strong demand for energy in the IEAs reference
case from developing Asian economies, notably
China and India, over the next 20 years will create
significant scope for Australia to increase its coal
exports. In addition, it is assumed that Australia will
maintain its share of exports into traditional markets
such as Japan and the Republic of Korea. Over the
next 20 years, there is the potential for Australias
coal exports to exceed 450Mt per year, from around
260 Mt in 200809. This potential growth includes
both thermal and metallurgical coal underpinned by
growing import demand throughout developing Asian
economies, including China, India, Vietnam and other
ASEAN countries. The common thread through all
of these economies are the plans to substantially
increase electricity generation and steel production
capacity as their economies grow. A significant
proportion of the planned electricity generation will
be coal-fired, reflecting its competitiveness compared
with other fuels, its reliability and its wide geographic
availability.
Much of the coal required to support new electricity

generation capacity is expected to be imported,
even in countries that have indigenous coal deposits.
This applies particularly in China, India and Vietnam,
and reflects the faster rate of consumption growth
compared with production growth. China has substantial
coal reserves of widely varying quality but many of
these have high production or transport costs because
of the distance between production and consumption
locations. India also has large coal reserves but most of
these are located in the centre of the country, whereas
a number of planned power stations will be sited
along the coastal demand centres. The combination
of high internal transport costs coupled with the
lower quality of Indias coal reserves is expected to
underpin its future import growth.
Like thermal coal, increased import demand for
metallurgical coal in China will reflect the cost
competitiveness of imports. India has very few
metallurgical coal reserves and is almost totally
reliant on imports. Increased Indian steel production
is likely to be based on increased coal imports.
Australia is well situated geographically to capitalise
on increased coal demand from Asia. However,
there are a number of other countries that also
have the potential to increase exports to meet the
growth in demand from developing countries. In the
Pacific market, where the majority of Australias coal
is exported, other suppliers with growth potential
include Indonesia, Mongolia and the Russian
Federation (from eastern ports).
Indonesia has been able to increase its exports very
rapidly since 2004, in response to growing demand
from Asia and bottlenecks within the Australian
supply chain that limited export growth. Part of
the reason that Indonesias exports have been
able to grow so quickly is that much of the coal is
transported from mines to export ships via water.
Coal is transported domestically via barges, which
load directly onto the ocean going vessels. This
avoids the long lead times and costs associated
with building land-based transport such as railways
and coal loading terminals. Indonesian government
policies requiring diversification of its domestic
energy mix away from the current dependence on oil
as well as general demand growth in the Indonesian
economy may see growth in domestic consumption
of coal. However, given the size of Indonesias coal
reserves and the relative ease with which coal can
be transported from mines to markets, Indonesias
coal exports seem likely to expand over the next
two decades.
In 2008, Mongolia exported around 10 million tonnes
of coal, all of which was to China. Mongolia has very
large thermal and metallurgical coal deposits which
the government aims to develop. For example, the
Tavan Tolgoi deposit is estimated to contain reserves
151
of up to 6 Gt, of which 2 Gt could be metallurgical

coal, making it one of the largest undeveloped coal
deposits in the world. The development of these
resources faces a number of challenges including
lack of infrastructure, remote location, harsh winter
climate, and Mongolias landlocked position.
Despite the challenges, there is a strong likelihood
that Mongolias coal industry will develop and
expand with a large proportion of coal production,
at least initially, being exported into northern and
western China.
Other countries which also have the potential to
significantly increase coal exports are Colombia and
South Africa. In the five years to 2008, Colombias
coal exports increased by around one third to 68 Mt.
The strong growth reflects Colombias production
of high energy, low sulphur coal, which is exported
to the United States and the European Union. Over
the long term, Colombias exports are projected to
continue growing, reflecting growing demand in the
United States (the low sulphur Colombian coal is
blended with the higher sulphur domestic coal) and
the European Union where domestic production is
expected to continue to decline. Colombias exports
will be underpinned by large reserves and relatively
low production costs.
Strong demand for coal over the past five years has
resulted in substantial increases in coal prices (see
Box 5.1 for explanation of coal prices). From 1998
350
Hard coking
280
2009 US$/t
152
South Africas coal exports could also increase

over the next 20 years. However, there is some
uncertainty as to the extent of any growth given
that South Africas coal export growth over the past
five years has been constrained by infrastructure
bottlenecks. Expansions to infrastructure are
expected to be in place from 2010 enabling export
growth in the short and medium term. Over the longer
term, increased domestic demand for coal associated
with increased electricity generation capacity could
limit potential export growth.
Thermal
210
140
70
AERA 5.29
0
1989
1993
1997
2001
2005
Year
Figure 5.29 Australia-Japan coal contract prices

Source: ABARE 2009d
2009
to 2003, thermal coal contract prices, in real terms

(US$200809), were between US$3252 per tonne
(figure 5.29). Hard coking coal contract prices were
settled around US$5070 per tonne. This compares
with the past four years when thermal coal prices
have been settled above US$50 per tonne, peaking
at US$125 per tonne in JFY 2008 and metallurgical
coal prices being set above US$100 per tonne,
including US$300 per tonne in JFY 2008.
Over the outlook period, strong demand for coal
is expected to keep average coal prices within the
range of prices seen over the past four years. That
is, above US$60 a tonne for thermal coal and above
US$110 a tonne for metallurgical coal. The higher
coal prices, relative to the early part of this decade
and the 1990s, reflect in addition to the strong and
increasing demand, rising production costs in major
coal exporting countries. For example, in Australia
and Indonesia, production costs are expected to
increase as coal is extracted from deeper seams,
while transport costs could increase as new mines
are located further inland, increasing the costs of
delivering coal to export points.
In summary, projected demand for coal over the next
20 years creates significant opportunity for growth
of Australian coal production and exports. However,
the Australian coal industry will face a number of
challenges in growing to capitalise on the opportunity.
The most significant of these access to substantial
but undeveloped deposits and potential infrastructure
constraints on exports are considered in more
detail later in this chapter.
Australia has a substantial coal resource base

Australia has 6 per cent of the worlds recoverable
EDR of black coal, ranking sixth behind the United
States, the Russian Federation, China, India and
South Africa. Australia also has the largest share of
the worlds recoverable economic resources of brown
coal (about 25 per cent). Australia ranks fourth in the
world in terms of combined recoverable economic
coal resources. Australias total coal resources are
substantially larger than this with total identified
resources of black coal being around 114 Gt and
brown coal resources of 194 Gt. However, the full
extent of Australias very large coal resource base
is not known: potential resources have not been
assessed because the existing identified resource
base is so large.
The resource potential of coal is probably in excess
of one trillion tonnes. There are over 25 sedimentary
basins with identified resources or coal occurrences
and there are areas within these basins that need
further exploration. Significant potential also exists
in poorly explored basins across the continent
(table 5.10).
C H A PTE R 5: COAL
Table 5.10 Australias coal resource potential

Basin
Age (million years)
Potential (Gt)
Pedirka
Permo-Carboniferous
(350225)
600 to 1300
(above 1000 m)
Cooper
Permian (270225)
+100
(11001600 m)
Canning
Permian (270225)
30 to 36
Galilee
Permian (270225)
Significant
Arckaringa
Permian (270225)
Significant
Sydney
Permian (270225)
Significant
Gunnedah
Permian (270225)
Significant
Gippsland
Tertiary (7010)
Significant
Murray
Tertiary (7010)
Significant
The Pedirka, Cooper and Canning basins are all

considered prospective for black coal. Given the high
quality of coals and proximity to infrastructure in the
major east coast basins, the search for coal in these
basins has been of low priority.
Strong demand for coal in recent years has stimulated
record levels of coal exploration. Although the focus
continues to be in the established producing basins,
there has been renewed interest in coal resources
across the continent that has highlighted Australias
potential for further growth in the resource base.
Coal-bearing sediments extend across vast areas of
the continent. This wide geographic spread reflects
the variety of conditions under which coal was
formed, ranging from tectonically active basin flanks
and troughs, such as the Bowen and Sydney basins,
to the stable interior basement areas such as the
Galilee and Cooper basins.
The potential for building on the already known
resources can be considered in two categories:
(1) discovery of new resources in coal basins
with identified resources and (2) discovery of new
resources in poorly explored basins. Most producing
coal basins have potential for discovery of further
resources. Basins with identified resources and
significant potential for growth in resources include
the Sydney, Gunnedah and Galilee basins.
The current total identified in-situ resources of
over 50 Gt in the Sydney Basin cover an area
which represents only a small part of the basins
extent. There is significant potential for additional
resources at depth, as well as outside the current
mining operations and in areas away from identified
deposits. It should be noted, however, that although
the potential coal resource within the Sydney Basin is
significant there are major impediments to potential
future use. These include large areas of the basin
being covered by national parks, urban development,

infrastructure, stored bodies of water, and prime
agricultural land.
The Gunnedah Basin is estimated to contain more
than 18 Gt of coal and recent regional exploration
has identified substantial resources at depths of
less than 300 m. Development of some of these
resources will require resolution of competing land
use issues and the challenge of new infrastructure
requirements.
The Galilee Basin has potential for future discoveries
of coal resources. Indicative of the potential of this
under-explored basin is the fact that since early 2008
close to 7 Gt of in-situ coal resources have been
added to Australias identified resources. Exploration
is continuing in the basin and additional resources
are likely to be found. Development of new resources
in the Galilee Basin will require extension and further
development of infrastructure.
Infrastructure for new coal developments

Infrastructure is an essential component of the supply
chain that links mines to the vessels that transport
coal to export markets. In Australia, almost all of
the coal is transported via rail from mine sites to
ports. Expansion of Australias coal exports to meet
the anticipated demand over the next two decades
will require alignment of infrastructure capacity with
production capacity (see below). Over the past five
years, both rail and port infrastructure has been
upgraded and capacity expanded (table 5.9). The
significant number of new coal projects currently under
construction or committed (tables 5.11 and 5.12)
are supported by a significant number of planned
infrastructure projects, including both expansion of
capacity at existing facilities and new facilities that
will help meet projected export demand over the next
decade (tables 5.13 and 5.14).
In the Bowen Basin, rail infrastructure is well
established and additional capacity is being created
by expanding existing assets. New rail links will be
required to unlock the potential of undeveloped
coal basins such as the Galilee and, to a lesser
extent, the Surat Basin. For example, Waratah Coal
is proposing to construct a 490 km rail line from
its proposed mine near Alpha in the Galilee Basin
to Bowen. Large scale coal production in the Surat
Basin will be possible once the Surat Basin Rail
has been constructed a 200 km rail link between
Wandoan and Banana. Construction of rail links will
be capital intensive. For example, Waratah Coal has
estimated its 490 km rail link could cost around
US$1.7 billion: this is in addition to a new coal
terminal which could cost around US$1 billion.
In the Hunter Valley, frameworks are in place to
increase the coal handling capacity of the rail and
port networks and provide long term capacity
153
New low emissions coal technologies key

to maintaining coals competitiveness in
coordination for the Hunter Valley operations by

aligning the capacity of coal loading terminals with
rail capacity and production. In the short term, port
capacity will be increased by completion of stage 1
of the Newcastle Coal Infrastructure Group (NCIG)
terminal (30 Mt per year) (ABARE 2009e). Further
expansions over the medium term include 27 Mt
per year stage 4 expansion of the Kooragang Island
Terminal and the 30 Mt per year second stage of the
NCIG terminal. These expansions, when complete
would give the Port of Newcastle a capacity of over
200 Mt per year. The proposed increase in port
capacity is supported by expansions of the rail
network as shown in table 5.13. The future capacity
expansions are in addition to recent expansions
outlined in table 5.9.
Technological advances will play an important role in

ensuring coal can continue to be consumed around
the world in a manner that meets economic and
environmental objectives. These advances are aimed at
increasing the efficiency (amount of energy generated
per unit of coal) and reducing greenhouse emissions.
These low emissions coal technologies also referred
to as clean coal technologies include dewatering
lower rank coals (brown coals) to improve the calorific
quality (increasing efficiency), treating flue gases,
gasification (conversion of coal to gas, box 5.5), and
technologies to capture and store carbon dioxide (CO2).
Development of the new low emissions coal
technologies is especially important for Australian
electricity generation which is overwhelmingly
based on coal-fired power stations. Most coalfired power stations in Australia (and globally) are
based on combustion of pulverised coal (PC) in
boilers to generate superheated steam that drives
steam turbines to generate electricity. The heat
and pressure of the steam determines the relative
efficiency of the plant. Efficiencies vary from 20 to
more than 40 per cent, depending on the thermal
content of the coal used and specific design of the
power plant. New generation thermal coal plants
are being developed and deployed based on the
enhanced efficiency and lower emissions achieved
by increasing the temperatures and pressures in
the steam turbines from subcritical to supercritical
conditions of temperature and pressure. Efficiency
increases to above 40 per cent and emissions fall
from around 10001400 kg of CO2 per MWh to less
In the first half of 2009, Queenslands port capacity

was expanded by around 25 Mt a year following
the completion of expansions to the Abbot Point,
Brisbane and Dalrymple Bay coal terminals. A
further 25 Mt a year expansion of the Abbot Point
coal terminal is under construction and scheduled
for completion in 2011. There are also several rail
projects under construction in New South Wales and
Queensland as of October 2009.
1.6
Brown coal pulverised fuel
1.5
1.4
Black coal pulverised fuel
1.3
Tonnes CO2 per MWh (electrical)
154
In addition to the above mentioned projects, there

are 18 infrastructure projects that are at a planning
stage, which will significantly increase capacity
over the next 20 years. If completed as scheduled,
Australias infrastructure capacity in 2020 could
increase to 642 Mt a year (table 5.14), compared
with around 350 Mt in 2009.
Brown coal integrated drying

Gasification combined cycle
1.2
1.1
Super/ultra critical pulverised fuel
1.0
Black coal integrated gasification

Combined cycle
0.9
0.8
0.7
0.6
0.5
In use
0.4
Future
0.3
0.2
AERA 5.30
25
30
35
40
45
50
55
60
Thermal efficiency (%)
Figure 5.30 Thermal efficiencies and carbon dioxide emissions from various coal-fired power generation technologies
(without CCS). Technologies in red indicate those current in use, whereas those in black are still to be deployed
Source: CSIRO 2009
C H A PTE R 5: COAL
than 800 kg CO2 per MWh with the use of super and
ultra-supercritical plants (figure 5.30). The ultrasupercritical pulverised coal boilers can potentially
significantly increase efficiency (to over 45 per cent)
and markedly reduce (by up to 4050 per cent) CO2
emissions to around 700750 kg CO2/MWh (CSIRO
2009). Direct injection plants with even higher
thermal efficiencies through removal of impurities in
coal using coal-water mixtures or direct carbon fuel
cells are also being developed.
Most new coal fired plants use supercritical

pulverised coal technology and achieve efficiencies
of 40 per cent or more and around 20 per cent
reductions of CO2 per MWh compared with the
older sub-critical plants. The first ultra-supercritical
pulverised coal plants with capacities of up to
1000MW have begun to be deployed in a number of
countries including China, Germany and the United
States. There is continuing research and
Box 5.2 Enhancing the EFFICIENCY of existing coal plants

A number of options are available to achieve modest
improvements in efficiency and greenhouse gas
reductions at existing coal plants.
1. Higher efficiency steam turbines Recent
research and development has improved the
performance of steam turbine blades. Modern
turbine blades can be retrofitted into existing
steam turbines with an increase in turbine
efficiency of up to 3 per cent. Some Australian
power stations have already installed these
modern blades (e.g. Loy Yang Power). Another 1
per cent efficiency gain is available by improving
turbine seals (SKM 2009).
2. Boiler efficiency improvement Boiler efficiency
can be improved by increasing the boiler heat
transfer surface area to remove more heat
from the flue gas before discharging it to the
atmosphere. This requires additional equipment
and capital outlay (SKM 2009).
3. Improved efficiency of auxiliary drives For
power stations that are subject to varying
demand there is a trend towards variable speed
drives and away from the traditional fixed speed
type. The use of variable speed drives enables
the driven machine to be controlled to an
optimum output. Improved pumps and fans can
also be fitted in many instances to obtain power
savings (SKM 2009).
4. Pre-drying brown coal Brown coal can have
up to 66 per cent moisture content. Pre-drying
removes some moisture before the coal is burnt
and avoids latent heat loss than if it remained in
the fuel. Pre-drying brown coal reduces carbon
dioxide emissions close to a level achieved by
black coal. For example, at Loy Yang Power a
$6.3 million Mechanical Thermal Expression
(MTE) pilot plant was tested in 200708. The
MTE process allows more than 70 per cent of
the water in brown coal to be removed with the
potential to significantly reduce CO2 emissions
when the dry coal is burnt to generate electricity.
5. Biomass co-firing Biomass co-firing in coalfired power stations can reduce carbon dioxide
emissions approximately proportional to the
proportion of biomass used. Wood waste is
generally used because coal fired boilers can
usually co-fire a small amount of wood waste

without major modification to the existing
equipment. It is unlikely for most large power
stations that the biomass available to co-fire
would represent more than 1 per cent of the
fuel input on an energy basis (SKM 2009).
A number of large coal fired power stations have
trialled co-firing mainly wood waste including,
Hazelwood, Bayswater, Liddell, Mt Piper, Muja,
Vales Point B and Wallerawang. At Muja 78 000
tpa of sawmilling residue is burnt displacing
45 000 tpa of coal and saving an estimated
90 000 tpa of greenhouse gas emissions
(www.verveenergy.com.au).
6. Co-firing natural gas The conversion of coal

fired power boilers in full or in part to use natural
gas will reduce the greenhouse gas emissions
because natural gas has lower carbon emissions
than coal. However, this will incur higher fuel
costs. Natural gas of up to 25 per cent of the
fuel energy can be co-fired in black coal boilers
without extensive modification to the heat transfer
surfaces (SKM 2009).
7. Solar heating Solar energy using high
temperature solar thermal technology is being
considered to provide steam and augment or
replace boiler feed-water at existing coal power
stations and result in reduced greenhouse gas
emissions. Solar Heat and Power Pty Ltd has
undertaken research and development on a
Compact Linear Fresnel Reflector array which has
been used to reheat water at the Liddell coal fired
power station.
8. Algal capture Algae can be used to capture
carbon dioxide emissions and produce biofuel
and livestock feed. Under an agreement with MBD
Energy Ltd, Tarong Energy, Loy Yang Power and
Eraring Energy will build an algal carbon capture,
storage and recycling process. The MBD Energy
process produces oil-rich micro algae suitable
for oil for plastics or fuel and a stock feed.
Pilot plants using MBD Energys technology are
planned to be constructed at the three companies
coal fired power stations (www.mbdenergy.com).
155
Box 5.3 New low emissions coal technologies
Oxyfuel combustion
Oxyfuel combustion involves firing a conventional
coal-fired power station boiler with oxygen and recycled
exhaust gases instead of air to produce a stream of
highly concentrated CO2 in the flue gas. This CO2 can
then be readily captured by cooling and compression
to a liquid for separation and transport to geological
storage. Oxyfuel combustion and capture has the
advantages of relative simplicity of the process and
potentially lower costs compared with other emergent
CO2 capture technologies, and it can be retrofitted to
existing boilers in pulverised coal plants.
Oxy-fuel combustion boilers have been studied on
a case-by-case basis in laboratory-scale and small
pilot units. The Callide Oxyfuel project aims to
demonstrate oxyfuel combustion and CO2 capture by
retrofitting a 30 MWe coal-fired boiler at CS Energys
Callide A coal power station in Queensland. This
will create a highly concentrated stream of CO2
suitable for capture and storage deep underground
in geological formations west of the power station.
The Callide project aims to demonstrate the viability
of technology capable of reducing emissions from a
typical coal-fired power station by 90 per cent.
Integrated Gasification Combined Cycle (IGCC)

156
IGCC power plants rely on a process known as

coal gasification, which involves reacting coal with
air or oxygen to create a Synthetic Gas or Syngas
(also known as coal gas or town gas), a mixture
of carbon monoxide (CO) and hydrogen (H2).
Syngas is combustible but has only half the energy
density of natural gas, and is used as a fuel or as
an intermediate step for the production of other
chemicals. Syngas was extensively used for street
lighting prior to the development of electricity.
In the IGCC plant, syngas produced by reacting coal
with air or oxygen under high temperatures and
Figure 5.31 Integrated Gasification Combined Cycle with

carbon capture and storage/sequestration
Source: Image Courtesy of GE Energy
pressures is used as fuel in a gas turbine to

produce electricity (figure 5.31). The carbon
monoxide in the Syngas can be cleaned and
reacted with water to convert it to CO2. The CO2 can
then be separated for storage leaving a stream of
pure hydrogen that is fed into the gas turbine. The
combustion product of hydrogen in the gas turbine
is principally water vapour. Heat recovered from
both the gasification process and the gas turbine
exhaust is used in boilers to produce steam in
a steam turbine to produce additional electrical
power. The IGCC process therefore combines the
two cycles (Rankine and Brayton cycles) to achieve
an operating efficiency of greater than 40 per
cent. Research is being undertaken to improve
the efficiency of combined cycle turbines, and to
develop special turbines specifically to be used
with hydrogen.
IGCC without carbon capture and storage is
approaching commercial deployment. There are a
number of commercial-sized demonstration IGCC
plants operating in several countries with outputs
up to 400 MW and plans have been announced to
develop several new IGCC power plants. As well as
improved efficiencies and lower greenhouse gas
emissions IGCC technology offers the potential to
more economically capture CO2 emissions.
There are several projects in Australia being
developed to use IGGC, including some with CCS.
The Wandoan project in Queensland, currently
in the development phase, proposes to build a
400 MW IGCC power station capable of capturing
and storing up to 90 per cent of CO2 emissions.
This plant would be due to start up late 2015 or
early 2016. This project is being developed by a
partnership between GE Energy and Stanwell.
ZeroGen Pty Ltd proposes to build a commercialscale 530 MW IGCC plant with CCS technology in
Central Queensland with a planned deployment
date of 2015. The project partners include
Mitsubishi Corporation (MC)/ Mitsubishi Heavy
Industries (MHI), and project is supported by
the Queensland Government and the Australian
Coal Association (through their Low Emissions
Technologies program).
HRL Ltd has developed Integrated Drying
Gasification Combined Cycle technology based on
brown coal. A proposed 550 MW power station
project that will demonstrate the technology is
planned to be sited at Morwell, in the Latrobe
Valley, Victoria.
C H A PTE R 5: COAL
development into new materials (e.g. nickel-based

alloys) that will enable operation at temperatures
above 600C and pressures above 25 MPa.
All but the most recent of Australias 21 GW of black
coal and 7.5 GW of brown coal-fired power plants
are based on subcritical pulverised coal technology.
Pulverised coal technology is currently the cheapest
large scale electricity generation process. Most new
pulverised coal power stations are likely to be of
supercritical or ultra-supercritical type given substantial
improvements in efficiency and greenhouse gas
reductions offered by these technologies. Retirement
of subcritical pulverised coal plants and replacement
by supercritical plants could significantly enhance

efficiencies and reduce CO2 emissions. However,
not only would this require major capital investment,
many of the existing subcritical plants have remaining
technical operating lives.
A number of approaches are being (and in many
cases have already been) adopted to improve
the efficiency of existing coal plants and achieve
reductions in greenhouse gas emissions without
incurring the major costs that are associated
with significant changes to the design conditions,
materials and equipment configuration of existing
plants. These improvements include: more efficient
Box 5.4 Carbon Capture and Geological Storage: CCS

CCS is a key greenhouse gas mitigation technology
in the Australian context. Burning fossil fuels such
as coal, natural gas and oil releases carbon dioxide
(CO2) and other greenhouse gases (GHG) to the
atmosphere adding to the potential for climate
change. Approximately 75 per cent of Australias
annual 550 Mt of GHG emissions are the result of
fossil-fuel energy production (including electricity
generation, transport, and manufacturing and
construction) (DCC 2009). Due to the heavy reliance
on coal and natural gas (in total providing over
95 per cent of fuel input), electricity generation
alone accounts for over 200 Mt of GHG emitted
annually. Australias abundant supply of coal and
natural gas, combined with Australias status as
the worlds largest coal supplier and the increasing
domestic demand for continued low cost energy
means that the use of fossil fuels for energy and
electricity generation will increase. CCS technologies
could assist in mitigating a significant proportion of
the GHG emissions resulting from our continued and
increasing use of fossil fuels (Geoscience Australia
2008).
Geological storage is the process of capturing
CO2 from stationary emission sources such as
power stations, industrial facilities, or natural gas
production and injecting it deep underground as a
Figure 5.32 The carbon dioxide capture, transport,

injection and storage process
Source: CO2CRC (www.co2crc.com.au)
dense fluid into geological formations, preventing

it from entering the atmosphere (figure 5.32). One
of the most critical factors in geological storage
is identifying rocks with suitable pore volumes for
storage and cap rocks for sealing.
Many sedimentary rocks, particularly sandstones,
contain large volumes of fluids (these include:
water, hydrocarbons, CO2, and other gases) held
in microscopic voids or pores between rock grains.
These pores can form up to 30 per cent of the
rock volume (figure 5.33). Where the pores are
interconnected the rock has permeability, that is,
fluids can flow through it. Deep in the geological
section, rocks like sandstones are usually filled
with highly saline water that moves very slowly
over millions of years. They are called deep saline
reservoirs, and they are the containers proposed for
storing greenhouse gases because they are too deep
and too saline for any other practical use.
CO2 injected into a saline reservoir becomes trapped
in the rock through a number of mechanisms.
Initially the CO2, which is less dense than water,
rises buoyantly through the reservoir until it meets
a barrier an impermeable cap rock (the seal, or
lid, to the reservoir) such as a mudstone or shale
(figure 5.34). The CO2 will accumulate under the cap
rock and spread out laterally beneath it. Some of the
CO2 will be caught in pores between grains of rock,
and will not move any further. Over time, a significant
portion of the rest of the CO2 will dissolve into the
saline formation water and be stored in solution while
some of the CO2 and water will react with minerals in
the rock to precipitate new minerals. Storage sites
are carefully selected and characterised to ensure
that a suitable cap rock is present to prevent CO2
from migrating out of the designated reservoir.
The most suitable reservoir and cap rocks are
found in sedimentary basins, and particularly in
hydrocarbon producing basins. In general, deep
saline reservoirs have the greatest potential
capacity to store CO2, because they are widespread,
157
large, and presently not used for other purposes.

Depleted oil and gas fields may also be used to
store CO2, although these are much smaller in
volume and in some cases are either not available
for use (i.e. are still producing hydrocarbons) or will
be used for other purposes such as natural gas
storage. The advantage of using depleted fields is
that they are well characterised and have already
demonstrated that they can trap and retain large
volumes of hydrocarbons. Other options include
storage in deep coal seams, basalts, shales, as CO2
hydrates beneath the sea floor, and through mineral
carbonation. Many of these latter options are at early
stages of development and will probably only provide
niche storage opportunities. National geological
assessments of storage resources in Australia
(APCRC 2003; Carbon Storage Taskforce 2009),
indicate that Australia has sufficient storage space
to make a significant impact on our GHG emissions
from stationary sources. For Australia, nearly all of
this resource is in deep saline reservoirs where there
is ample volume and no potential resource conflict
(e.g. with hydrocarbon or fresh water production).
158
wells. The former two are mitigated through

good geological characterisation of an injection
site, while the latter is mitigated through careful
design and engineering. In addition, both new
and existing techniques are being used to track
CO2 in the subsurface, including seismic imaging,
down-hole pressure measurement and gas and
water sampling, and shallow aquifer groundwater
sampling. Surface monitoring techniques such
as atmospheric and soil gas sampling will ensure
that in the unlikely event that any CO2 migrates
to the surface it will be detected and remedied
immediately.
Many of the concepts around geological storage of

CO2 have been taken directly from the petroleum
industry which has extensive experience with oil and
natural gas (including naturally occurring CO2) in the
subsurface. Studies of hydrocarbon accumulations
around the world have shown that fluids have
remained trapped in deep geological formations
and structures for tens to hundreds of millions of
years. This gives confidence that injected CO2 can
be securely stored in similar geological settings
for similar amounts of time. Demonstrating the
security and safety of storage before, during and
post injection is of particular concern to government,
industry and the public. Potential points of leakage
include faults, cap rocks, and pre-existing petroleum
Capture, injection and geological storage of

CO2 is an established process in the petroleum
industry and is already occurring at commercial
scale (more than 1 Mt CO2 per year) at several
locations globally. These include Statoils Sleipner
and Snohvit gas fields in the North and Barents
Seas respectively, BPs gas project at In Salah
in Algeria, and the enhanced oil recovery project
at the Weyburn and Midale fields in Canada. In
addition, over 50 Mt of CO2 are transported over
more than 3000 km of dedicated CO2 pipelines and
injected each year for enhanced oil recovery in North
America. In Australia, one of the largest research
storage projects in the world, the CO2CRCs pilot CO2
injection project in the Otway Basin in Victoria, has
injected 65 000 t of CO2 into a depleted gas field,
and a further injection project into a saline reservoir
is planned. The ZeroGen project in Queensland
is developing a 530 MW IGCC power station with
planned capture and storage of about 60 Mt of CO2
in total. The Gorgon natural gas project offshore
Western Australia will store 125 Mt of naturally
occurring CO2 separated from the produced gas.
There are a number of other projects in various
stages of planning or implementation (figure 5.35).
Figure 5.33 Microscope image of a reservoir rock

a porous and permeable sandstone
Figure 5.34 Microscope image of a cap rock

an impermeable mudstone
Source: Gibson-Poole et al. 2002
Source: Daniel 2006
C H A PTE R 5: COAL
Major Government initiatives in CCS
The Australian Government is supporting a range of

initiatives and policies to accelerate the development
and deployment of CCS in Australia (RET 2009). These
include the:
Commonwealth CCS Legislation. The Offshore

Petroleum and Greenhouse Gas Storage Act
2006, the worlds first national legislation
enabling CO2 storage, provides a framework for
access and property rights for the geological
storage of greenhouse gases such as CO2 in
Commonwealth offshore territory, that is, greater
than three nautical miles from the coast. In
another world first, in March 2009 the Australian
Government released ten offshore areas for
bids for the rights to explore for greenhouse gas
storage sites.
$4.5 billion Clean Energy Initiative, to support

research, development and demonstration of low
emissions energy technologies, including $2 billion
to support the construction and demonstration of
two to four large scale CCS projects from 2015
under the CCS Flagships Program.
$400 million, over eight years, National Low
Emissions Coal Initiative, which includes support
for the CCS Flagships Program and the National
Carbon Mapping and Infrastructure Plan. This
initiative aims to accelerate the development and
deployment of technologies to reduce emissions
from coal-powered electricity generation, while
securing the contribution that coal makes to
Australias energy security and economic wellbeing.
Global Carbon Capture and Storage Institute

(GCCSI). In 2009, the Australian Government
established the GCCSI with annual funding of
up to $100 million in order to address barriers,
and accelerate deployment of industrial scale
carbon dioxide capture, transport, and storage
technologies globally. The Institute aims to
build sufficient confidence in the technology,
by helping to facilitate the deployment of fully
integrated large-scale carbon capture and
storage projects globally.
Carbon Storage Taskforce, whose mission is

to develop the National Carbon Mapping and
Infrastructure Plan. The purpose of the NCMIP
is to promote prioritisation of, and access to,
national geological storage capacity and
120
associated infrastructure requirements needed

to accelerate deployment of CCS in Australia.
130
140
150
159
10
DARWIN
750 km
Gorgon
20
ZeroGen
Callide Oxyfuel
Wandoan Power
Tarong Pilot
Moomba Carbon Storage
BRISBANE
Coolimba Power
Delta Power
PERTH
Collie South-West Hub
Munmorah Pilot
ADELAIDE
FuturGas
Sedimentary basins
CCS projects
MELBOURNE
Otway Basin Pilot

CarbonNet
Loy Yang
30
SYDNEY
HRL Dual Gas

Monash Energy
Hazelwood
HOBART
40
AERA 5.35
Figure 5.35 Active and proposed CCS projects in Australia

steam turbines; improvements to boiler efficiency;

pre-drying brown coal; co-firing with gas or biomass;
the use of solar heating; and biosequestration of CO2
emissions (box 5.2). On the other hand, the use of
dry cooling in carbon capture and storage to reduce
water has the effect of lowering efficiency.
Carbon capture and storage (CCS)

Carbon capture and storage (CCS) is a greenhouse
gas mitigation technology that can potentially reduce
CO2 emissions from existing and future coal-fired
power stations by more than 80 per cent. Current
and new coal combustion technologies (based
on pulverised coal technologies) are approaching
maximum efficiency and greenhouse gas emission
intensity limits (figure 5.30). Further reduction of CO2
emissions requires the capture (as a supercritical
fluid), transport and (geological) storage of CO2.
At this point CCS has not been demonstrated at
the scale needed for power plants, and until the
technology matures implementation of CCS is likely
to add significantly to the costs of production of
electricity. Large scale demonstration plants with
CO2 storage are expected to start operation in 2015,
with an aim to have the technology commercially
available by 2020.
160
There are three main approaches to reducing

emissions from coal use by removing CO2. One
of these removes CO2 before the coal is burned
to produce electricity (i.e. pre-combustion using
Integrated Gasification Combined Cycle technology)
whereas the other two remove the CO2 after
combustion (oxyfuel combustion and post-combustion
capture).
Integrated Gasification Combined Cycle (IGCC)
involves reacting coal at high temperatures and
pressures with oxygen and steam to convert the coal
to synthetic gas (Syngas). Syngas is predominantly a
mixture of hydrogen (H2) and carbon monoxide (CO)
and commonly some carbon dioxide (CO2). Syngas
is combustible and can be used as a fuel although
it has less than half the energy density of natural
gas. In the IGCC the Syngas is combusted in a high
efficiency combined cycle system, which comprises
a gas turbine driving a generator (box 5.3). The hot
exhaust gas from the gas turbine raises steam for a
steam turbine.
Oxyfuel combustion involves burning pulverised
coal with pure oxygen rather than air, to produce a
stream of highly concentrated CO2. This enables the
CO2 to be more readily captured (without the use of
solvents) by cooling and compression to form liquid
CO2 for transport to geological storage (box 5.3).
Post-Combustion Capture involves the separation of
CO2 from the flue gases released in the combustion
process. This is generally done by contacting the
gases with a chemically reactive liquid (commonly
an amine or ammonia solution) to capture the

CO2. The CO2 is then removed from the absorbing
solution by heating, compressed and transported to
an underground storage location. Because postcombustion capture occurs after the combustion
process, this technology can be retrofitted to existing
combined cycle plants.
Other coal conversion technologies

Coal can also be converted into other synthetic
fuels, including liquid fuels that can be used as
transport fuels. Conversion of coal to a liquid (CTL)
a process also known as coal liquefaction can
be achieved directly or via synthetic gas (syngas).
Direct liquefaction works by dissolving the coal in a
solvent at high temperature and pressure. Although
this process is highly efficient the liquid products
require further refining to be suitable as high grade
fuels. In the more common indirect CTL method coal
is gasified to form syngas and then condensed over a
catalyst the Fischer-Tropsch process to produce
high quality, ultra-clean fuel products (box 5.5).
There has been little interest in CTL projects until
recently because of the ready availability of relatively
low cost crude oil and the high capital and operating
costs of CTL plants. South Africa has the largest
CTL industry in operation today with a CTL capacity
of more than 160 000 barrels of oil per day. CTL
plants provide some 30 per cent of South Africas
liquid transport fuels needs. In Australia from
1985 to 1990 a Japanese consortium operated
a CTL pilot plant at Morwell which demonstrated
that hydrogenation of Latrobe Valley brown coal
was technically feasible. A CTL project commenced
production in China in late 2008.
However, rising oil prices and concerns about security
of oil supply have prompted renewed interest in CTL
technologies and there are currently more than 50
projects worldwide with two thirds of those in China
and the United States (World CTL Association 2009).
Significant challenges to the uptake of CTL projects
are the high capital costs and the high greenhouse
gas footprint of CTL projects. New CTL projects are
likely to require some form of carbon capture
and storage (CCS) to reduce the greenhouse gas
emissions. The capital costs have been estimated
at approximately US$60000 to US$120 000
per barrel per day (excluding the costs of CCS),
equivalent to a capital cost of US$4 billion for
a 40000 barrel per day CTL plant (World CTL
Association 2009).
A number of companies are currently investigating
the feasibility of CTL plants in Australia including
New Hope Corporation at the New Acland mine
(Queensland), Ambre Energy Ltd at Felton
(Queensland), Spitfire Oil at Salmon Gums (Western
Australia), Blackham Resources at Scaddan (Western
Australia), Hybrid Energy Australia at Kingston
C H A PTE R 5: COAL
(South Australia), Altona Resources at Wintinna

(South Australia) and Syngas Ltd at Clinton (South
Australia).
A number of projects are actively considering projects
involving underground or in-situ coal gasification
(UCG). In this method fuel gases are produced
underground when a coal seam gets sufficient air to
burn but insufficient for all consumable products to
be consumed. The gasified coal can then be used to
produce liquid fuels (or electricity).
UCG technology has evolved through numerous trials

since the early 1900s but has been only used on a
commercial scale for power generation in the former
Soviet Union where it has operated for over 40
years. UCG provides access to deep coal and other
stranded coal resources avoiding the need to mine
and process it. There has been renewed interest in
coal gasification in recent years with a number of
projects at different stages of evaluation. There are
about 30 underground coal gasification projects at
various stages in China alone.
Box 5.5 Coal Conversion Technologies
Coal to Liquids (CTL)

The production of liquids from coal requires the
breakdown of the chemical structures present in
coal with the simultaneous elimination of oxygen,
nitrogen and sulphur and the introduction of hydrogen
to produce a stable liquid product. Syngas produced
from coal gasification can be converted into a variety
of products including petrol, diesel, jet fuel, plastics,
gas, ammonia, synthetic rubber, naptha, tars,
alcohols and methanol using the Fischer-Tropsch
process (figure 5.36). Coal-derived fuels have the
advantage of being sulphur-free, low in particulates,
and low in nitrogen oxides.
CTL technology was developed in the early 20th
century and was used in Germany in the 1930s
and 1940s. Since 1955 in South Africa, Sasol has
operated CTL plants and in late 2008 the Shenhua
Group commissioned a CTL plant at Ordos in China.
There are some 50 CTL projects being considered
around the world with the bulk of these in China and
the United States. Synthetic fuels produced by CTL
processes have been tested for suitability as jet fuel
in aeroplanes. Coal as a potential source of liquid
Natural Gas
Coal
Pet Coke
Biomass
Wastes
Synthesis Gas
Production
Air
Oxygen
Plant
CO
H2
FT Liquid
Synthesis
Tail
Product Gas
Recovery
Power
Generation
Wax
Hydrogen
Recovery
O2
Liquid
Fuels
Underground Coal Gasification (UCG)

Synthetic gas (syngas) can be produced also by
underground or in-situ coal gasification (figure 5.37).
In this method fuel gases are produced underground
when oxidants (generally air) are injected into an
unmined coal seam causing the coal to burn but
combustion is insufficient to consume all combustible
material. Carbon dioxide, carbon monoxide, hydrogen
and methane are produced to yield a gas of low but
variable heat content. Air is pumped into the burning
coal bed through a well, and the gas is drawn off
from a point behind the fire-front through another
well. The gasified coal can then be used to produce
a range of liquid fuels (or electricity) as well as other
chemical feedstocks and fertilisers. UCG technology
could also have synergies with CCS as the CO2 could
be stored in the coal cavity after gasification.
The power station at Angren in Uzbekistan has the
only operating underground coal gasification project
in the world. At present, many projects are in various
stages of development in the United States, Canada,
South Africa, India, Vietnam, Australia, New Zealand
and China to produce electricity, liquid fuels and
synthetic gas. In Australia projects being investigated
include, Linc Energys Chinchilla Project, Carbon
Energys Bloodwood Creek Project and Cougar
Energys Kingaroy Project, all in Queensland.
H2
An
Option
Hydrogen
Separation
fuels has the advantage of being both widespread and

relatively low cost. For some countries it may decrease
reliance on oil imports and improve energy security.
Wax
Hydrocracking
Liquid
Fuels
Hydrogen
Transportation
Fuels
AERA 5.36
Figure 5.36 Fischer-Tropsch Technology

Source: Sustainable Design Update
(www.sustainabledesignupdate.com)
Figure 5.37 Underground Coal Gasification Process

Source: Cougar Energy (www.cougarenergy.com.au)
161
UCG has been successfully demonstrated at the

Chinchilla project (Linc Energy 2009) in the Surat
Basin in Queensland. A major trial from 19992003
achieved 95 per cent recovery of coal resource
and 75 per cent total energy recovery with a high
availability of produced syngas. A gas-to-liquid (GTL)
plant to produce clean liquid fuels from UCG syngas
began production in late 2008.
Utilisation of coal resources

competing land use
Australias major coal resources are located mostly
on the eastern seaboard in relatively close proximity
to ports and the major industrial and urban power
demand centres. Continued development of the coal
industry, especially the development of new coal
mines, will require access to land for mining and
transport of the coal. Future development of these
resources will need to take into account competing
land uses and various environmental issues.
162
Companies lodging mine development proposals

are required to consult with governments
and community stakeholders and undertake
assessments of the potential impact of any
proposed mining project on the environment
(including assessments of any impacts under
the Environment Protection and Biodiversity
Conservation Act 1999) and on third parties such
as the community. Where land title is held privately,
there is usually a legislative requirement to seek
the consent of the land owner (or occupier) and
negotiate compensation for access.
Coal mining has taken place in New South Wales
for more than 200 years and many mines operate
in close proximity to urban and semi-rural areas,
high-value agricultural land, metropolitan water
storages and in some locations national parks
(e.g. south of Sydney). In Queensland, much of the
coal production is from open cut (surface) mines
in areas of low agricultural value and at locations
remote from cities, although underground mining
does takes place in central Queensland.
Development of new coal mining projects in areas
with land of higher agricultural value and other
existing land uses will require balancing competing
land use interests, particularly those of agriculture,
water management (both surface and ground water),
and coal mining activities.
Future development of coal projects is likely
to require planning for land access corridors.
Proposals for new coal-fired power stations are likely
to require the identification of suitable geological
sites and pipeline infrastructure needed to support
capture and storage of carbon dioxide. For geological
storage, potential sites may need to be identified and
assessed for suitability and approved for injection and

storage.
Water availability
Water is required at the coal mine site for a range
of uses, including dust suppression, removal of
mineral residues, washing of vehicles and for human
consumption. Water is also a key input for coal
washing, a cleaning process undertaken to reduce
contamination prior to use. Water is also used for
dust suppression at ports.
Water used by the coal industry is obtained from
a variety of sources including mains supply, rivers,
lakes, onsite surface runoff and storm water, mine
water, ground water, and recycled water. This water
is accessed in the context of competing uses,
including for agriculture, industry, human consumption
and environmental flows. The recent drought has
highlighted the need to manage water more efficiently,
and escalated the priority given to water management
issues across all levels of government in Australia.
Both New South Wales and Queensland have water
legislation and policies in place to support the
sustainable and integrated management of their water
resources. The Water Management Act 2000 provides
the statutory framework for water management in New
South Wales, while water legislation in Queensland
is embodied in the Water Act 2000. A key element of
the legislation in both states is the voluntary trading
of water entitlements, which is being implemented
progressively. By allowing water to be allocated
to those uses with the highest net benefit, water
trading can contribute to a more efficient use of water
resources. Another key element of the legislation in
both states is the progressive introduction of water
sharing resource plans. The aim of the plans is to
balance future water demands across different types
of water users, and provide a secure allocation of
water for these uses.
Current legislation enables coal mining companies
to better manage their water issues. Typically, coal
mines have either too much water or too little water.
Where water is in short supply, allocation can be
bought from other allocation holders to fill a deficit.
In the case of surplus water, arising for example
from excessive ground water in mining areas,
arrangements can be put in place through catchment
water sharing plans to use the water for other
commercial purposes.
More broadly, the National Water Commission
is undertaking a $2 million study looking at the
cumulative impacts of mining on groundwater
resources. The study, due for completion in June
2010, will appraise the planning and permitting
practices across jurisdictions and the work
undertaken by the mining industry with water
management. It will also develop consistent and
C H A PTE R 5: COAL
rigorous methodologies that will improve the ability

to assess and forecast the availability, condition and
effects of mining on groundwater resources.
Capital and other issues
is projected to result in a decline in coals share

of domestic electricity generation. Details of the
assumptions underpinning these projections can
be found in Chapter 2.
In conjunction with access to infrastructure, access

to adequate capital and a supply of skilled labour
will be critical to the growth of Australias coal
industry. Expansion of Australias coal production and
infrastructure to provide the export capacity to meet
growing global demand for coal potentially involves
major capital expenditure of at least $10 billion and
potentially more than $50 billion over the next 10
years or so (ABARE 2009e). Capital requirements for
advanced stage mining projects total $6.1 billion with
a further $2.9 billion in coal infrastructure (tables
5.11 and 5.13). Capital requirements for the less
advanced coal projects exceed $26billion for mining
projects and $13.5 billion in coal infrastructure
(tables 5.12 and 5.14).
Key projections to 202930
Modification and/or replacement of current coalfired power stations (mostly subcritical pulverised
coal technology) with lower emissions technology,
including capture and geological storage of CO2, to
meet future emissions reduction targets will also
require major capital investment.
Coals share of domestic electricity generation is

projected to decline to 43 per cent in 202930,
as coal is replaced by renewable and other lower
emissions energy sources.
These capital requirements need to be considered

against the global demand for capital to meet
growing energy needs and the global transition to
lower emissions energy technologies. These capital
requirements could be as large as US$10.5 trillion
over the next 20 years, amounting to an annual
additional capital investment of around US$430
billion, equivalent to 0.5 per cent of global GDP
(IEA 2009c).
Another, although less substantial, potential
constraint that may impact on the medium to long
term prospects of the Australian coal industry is
availability of an adequate pool of skilled labour.
This will be particularly important as more technically
advanced and capital intensive projects come on line.
In the five years to the middle of 2008, demand for
labour within the mining industry increased rapidly
leading to labour shortages at some coal mines.
Part of the cost inflation experienced at mining and
infrastructure construction sites between 2005 and
2008 has been attributed to the short supply of
essential skills which led to increased engineering
and construction costs.
5.4.2 Outlook for coal market

Increased global demand for coal (projected by the
IEA in its reference scenario to be 1.9 per cent per
year over the period to 2030) is expected to result
in increased Australian coal production and exports.
However, the impact of the Renewable Energy Target
(RET) and a 5 per cent emissions reduction target
ABAREs latest long-term projections, assuming the

RET, a 5 per cent emissions reduction target below
2000 levels by 2020 and other government policies
(ABARE 2010), include:
Coal production increases at an average rate of
1.8 per cent per year to total 13 875 PJ (720Mt).
Increased production will be underpinned by
export demand.
Coal consumption is projected to decrease at an
average annual rate of 0.8 per cent to 1763 PJ
in 202930. The share of coal in total primary
energy consumption will fall to 23 per cent in
202930.
Australias exports of coal are projected to increase

by 2.4 per cent per year to 12 112 PJ (450 Mt) in
202930. Exports are likely to account for around
85 per cent of production in that year.
Production
Australias coal production is projected to increase
significantly over the next 20 years, supported
by strong demand from global markets. This will
more than offset the projected decline in domestic
demand under a 5 per cent emissions reduction
target. Production is expected to grow by nearly 50
per cent over the period to 2030, equivalent to an
annual increase of 1.8 per cent to reach 13 875 PJ in
202930 (ABARE 2010). The majority of additional
coal production is expected to be sourced from New
South Wales and Queensland where export quality
coal is mined and where necessary infrastructure is
in place.
Consumption
Australias coal consumption is projected to decline
by an average annual rate of 0.8 per cent to reach
1763 PJ by 202930. Coals share of total primary
energy consumption is projected to fall to 23 per cent
in 202930.
The most important driver of lower coal consumption
is the projected reduction in electricity generation
from coal-fired power plants. The RET will encourage
increased electricity generation from renewable fuels
sources, while the introduction of emissions reduction
targets will make coal less cost competitive compared
with other fuels such as gas.
163
The nature of Australias electricity generation is
projected to change significantly in response to the
introduction of the RET and emissions reduction
targets. Coal has historically underpinned Australias
electricity production and in 200708 coal accounted
for around three quarters of Australias electricity
generation. Coal is projected to account for 43 per
cent of electricity generation in 202930 (figure
5.38).
Although coal-fired electricity generation is projected
to decline in the period to 2030, new coal-fired
electricity capacity is still planned in Australia. As
of October 2009 there were two coal-fired power
stations (black coal) at an advanced stage, each
of more than 200 MW, one in New South Wales
(upgrade) and one in Western Australia (table 5.15).
In addition, there are a further six black coal and two
brown coal power stations at a less advanced stage
(table 5.15). A number of the less advanced coal
projects incorporate CCS or coal-to-liquids or coal
gasification as well as electricity generation.
Exports
The growth in exports is expected to occur in New

South Wales and Queensland. In New South Wales
250
100
200
80
Proposed development projects

The long term expansion of Australias coal
production and exports will be underpinned by
a number of projects that are currently under
construction or at various stages of planning.
At the end of October 2009, there were 12 coal
projects under construction (table 5.11), scheduled
to be completed at various times over the next
three years. Of the 12 projects, seven are located
in Queensland and five are in New South Wales. The
projects have a combined coal capacity of around 50
Mt, at an estimated capital cost of $6.1 billion. The
largest of these, in terms of capacity, are Clermont
(which is a replacement for the depleting Blair Athol
mine) and Moolarben. Both have capacities in excess
of 10 Mt per year.
In addition to the projects under construction, there
a number of mine and infrastructure projects at a
less advanced stages of development, that are either
at feasibility study stage, in the process of receiving
government approval or not yet subject to a final
investment decision.
There are 49 mining projects at a less advanced
stage of development, of which 16 are in New
South Wales, 32 in Queensland and one in Western
Australia (table 5.12). These projects have a potential
capacity of over 300 Mt.
14 000
12 000
10 000
60
100
40
50
20
8000
PJ
150
TWh
164
Australias coal exports are projected to continue

to grow strongly with the strong growth in exports
underpinned by growth in coal import demand,
particularly from developing economies such as China
and India. Australias coal exports are projected to
grow at an annual rate of 2.4 per cent and reach
12112 PJ (450 Mt) by 202930 (figure 5.39).
continued expansion of the Hunter Valley and further

development in the Gunnedah Basin is expected to
underpin increased exports. Expansion of production
capacity in the Bowen Basin and the development
of mines in the Galilee Basin is expected to support
increased coal exports from Queensland.
6000
4000
0
1999-00
2001-02
2003-04
2005-06
2007-08
2029-30
Year
(TWh)
2000
0
200708
201112
201516
201920
202324
2027- 202928 30
Year
Share of total
(%)
Exports
AERA 5.38
Production
Consumption
AERA 5.39
Figure 5.38 Australias coal-fired electricity generation to

202930
Figure 5.39 Australias black coal projected supplydemand balance to 202930
Source: ABARE 2010
Source: ABARE 2010
C H A PTE R 5: COAL
Expanded infrastructure capacity will be achieved

through the completion of seven port and rail projects
of which four are in Queensland and three in New
South Wales (table 5.13). When complete, Australias
coal export infrastructure capacity could increase
by 65 Mt per year. The largest of these projects, in
terms of capacity, are the 30 Mt per year Newcastle
Coal Infrastructure Group Coal terminal and the 25 Mt
per year expansion to the Abbot Point Coal Terminal
in Queensland. In terms of infrastructure, there are
18 projects at a less advanced stage, which includes
rail and port projects in both New South Wales and
Queensland (table 5.14).
Some of the projects at a less advanced stage

of development may encounter changes in
economic or competitive conditions, or may be
targeting the same emerging market opportunities,
necessitating rescheduling. In addition, securing
finance for project development, even for high
quality projects with a high probability of success,
is not guaranteed. Despite the uncertainty inherent
to projects at these earlier stages of consideration,
the significant number of large scale projects at
less advanced stages under consideration for
development is expected to provide a firm platform
for future growth of Australias coal industry.
Table 5.11 Coal mines at an advanced stage of development, as at October 2009

Project
Company
Location
Status
Start up
Capacity
Capital
Expenditure
Blackwater
Wesfarmers
Creek Diversion
200 km W of
Rockhampton,
Qld
Expansion,
under
construction
2010
nil (extension
of Curragh
mine life)
$130 m
Blakefield
South
Xstrata/
Nippon Steel
16 km SW of
Singleton, NSW
New project,
under
construction
2010
nil
(replacement
for Beltana)
$375 m
Cameby Downs
Syntech
Resources
100 km NE of
Dalby, Qld
New project,
under
construction
2010
1.4 Mt thermal
coal
$250 m
Carborough
Downs longwall
Vale
20 km NE of
Moranbah, Qld
Expansion,
under
construction
2011
4.2 Mt coking
US$330 m
(A$398 m)
Clermont
opencut
Rio Tinto
11 km N of
Clermont, Qld
New project,
under
construction
2010
12 Mt thermal
(replacing Blair
Athol capacity)
US$1.3 b
(A$1.57 b)
Curragh Mine
Wesfarmers
200 km W of
Rockhampton,
Qld
Expansion,
committed
2011
Increase to
8.5 Mt
$286 m
Kestrel
Rio Tinto
51 km NE of
Emerald, Qld
Expansion,
under
construction
2012
1.7 Mt coking
US$991 m
(A$1.19 b)
20 km SW of
Muswellbrook,
NSW
New project,
under
construction
2012
8 Mt thermal
$1 b
Moolarben
stage 1
Felix Resources Near Mudgee,

NSW
New project,
under
construction
2010 (open
cut)
2012
(underground)
8 Mt opencut;
up to 4 Mt
underground
(ROM, thermal)
$405 m
(incl coal
preparation
plant)
Mount Arthur
opencut
(MAC20)
BHP Billiton
5 km SW of
Muswellbrook,
NSW
Expansion,
under
construction
2011
3.5 Mt thermal
US$260 m
(A$313 m)
Narrabri Coal
Project
(stage 1)
Whitehaven
20 km SE of
Narrabri, NSW
New project,
under
construction
early 2010
1.5 Mt thermal
$185 m
150 km W of
Brisbane, Qld
Expansion,
under
construction
late 2009
0.6 Mt thermal
$36 m
Mangoola Xstrata Coal

(Anvil Hill
opencut)
New Acland New Hope Coal

(stage 3)
Source: ABARE 2009e
165
Table 5.12 Coal mines at a less advanced stage of development, as at October 2009
166
Project
Location
Status
Start up
Capacity
Capital
Expenditure
Alpha Coal Project
120 km SW of
Clermont, Qld
New project, feasibility

study under way
2013
30 Mt thermal
$7.5 b (inc.
mine, port
and rail)
Ashton South
East opencut
14 km NW of
Singleton, NSW
Expansion, feasibility
study under way
2010
2.4 Mt thermal
$83 m
Austar underground
(Stage 3)
6 km SW of
Cessnock, NSW
Expansion, govt approval

received
201213
3.6 Mt ROM hard

coking
$80 m
Belvedere
underground
160 km W of
Gladstone, Qld
New project, prefeasibility

study under way
2013
9 Mt hard coking
na
Bickham opencut
20 km N of Scone,
NSW
New project, EIS under

way
2011
2 Mt thermal
$50100 m
Boggabri opencut
17 km NE of
Boggabri, NSW
study under way
2013
2.8 Mt thermal
11.5 b yen
(A$140 m)
Canning Basin
project
150 km SE of Derby,
WA

study under way
201213
2 Mt thermal
na
Caval Ridge (Peak

Downs expansion)
20 km SW of
Moranbah, Qld
Expansion, prefeasibility
study under way
2013
5.5 Mt coking
na
Codrilla
62 km SE of
Moranbah, Qld

way
na
3.2 Mt PCI
na
Daunia
25 km SE of
Moranbah, Qld
New project, govt

approval received
2011
4 Mt coking
na
Dawson South
(stage 2)
15 km NW Theodore,
Qld
Expansion, EIS under way
na
57 Mt thermal
(ROM)
na
Drayton mine
extension
13 km S of
Muswellbrook, NSW
study under way
na
2.5 Mt thermal
$35 m
Eagle Downs
(Peak Downs East
underground)
20 km SE of
Moranbah, Qld

way
2014
4.6 Mt coking
$977 m
Ellensfield coal mine

project
175 km W of
Mackay, Qld

way
na
4.5 Mt thermal
and coking
na
Ensham bord and

pillar underground
mine
40 km NE of
Emerald, Qld

study under way
2011
1.5 Mt thermal
$120 m
Ensham Central
longwall underground
40 km NE of
Emerald, Qld
study under way
na
7 Mt thermal
$700 m
Goonyella Riverside
Expansion
30 km N of
Moranbah, Qld
study under way
na
up to 9 Mt hard
coking
na
Grosvenor
underground
8 km N of Moranbah,
Qld

way
2012
6.5 Mt hard
coking
US$850 m
(A$1 b)
Hail Creek expansion
120 km SW of
Mackay, Qld
study under way
2011
5.5 Mt thermal,
2.5 Mt hard
coking
na
Hunter Valley
Operations
Expansion
24 km N of
Singleton, NSW

received
2011
3.6 Mt ROM semisoft coking and

thermal
$130 m
Intergrated Isaac
Plains Project
180 km SW of
Mackay, Qld
na
2 Mt coking and
thermal
$118 m
Kevins Corner
Galilee Basin, Qld

study under way
2013
30 Mt thermal
na
Kunioon
Kingaroy, Qld
New project, on hold
na
10 Mt thermal
(ROM)
$500 m
Lake Vermont
60 Km SE of
Moranbah, Qld
study under way
2014
2 Mt
$100200 m
Metropolitan longwall
30 km N of
Wollongong, NSW

received
na
3.2 Mt
$50 m
C H A PTE R 5: COAL
Project
Location
Status
Start up
Capacity
Capital
Expenditure
Middlemount
(stage 1)
6 km SW of
Middlemount, Qld
New project,
environmental approval
received
2010
1.8 Mt coking
(ROM)
$65 m
Middlemount
(stage 2)
6 km SW of
Middlemount, Qld

study under way
2012
3.2 Mt coking
(ROM)
na
Millennium
expansion
22 km E of
Moranbah, Qld
study under way
na
8.1 Mt (ROM)
na
Monto coal mine

(stage 1)
120 km S of
Gladstone, Qld

completed
na
1.2 Mt thermal
$35 m
Monto coal mine

(stage 2)
120 km S of
Gladstone, Qld
study under way
na
10 Mt
na
Moolarben
(stage 2)
near Mudgee, NSW
na
12 Mt opencut;
up to 4 Mt
underground
(ROM, thermal)
$120 m
Moranbah South
project
4 km S of Moranbah,
Qld

study under way
2014
6.5 Mt coking
US$1 b
(A$1.2 b)
Mount Arthur North

underground
5 km SW of
Muswellbrook, NSW
New project, govt

approval received
2011
8 Mt thermal
(ROM)
$320 m
Mount Pleasant
Project
6 km NW of
Muswellbrook, NSW

study completed, on hold
2013
10.5 Mt thermal
$1.3 b
Narrabri Coal Project

(stage 2)
20 km SE of
Narrabri, NSW
study under way
2011
4.5 Mt thermal
$300 m
New Acland
(stage 4)
150 km W of
Brisbane, Qld
Expansion, EIS
completed
na
5.2 Mt thermal
coal
na
NRE No. 1 Colliery
Wollongong , NSW
study under way
na
3 Mt
$250 m
Olive Downs North
30 km S of
Coppabella, Qld

study under way
2011
1 Mt coking
na
Red Hill underground
45 km N of
Moranbah, Qld

study under way
2014
2 Mt PCI and
thermal
na
Saddlers Creek
underground and
opencut
15 km SW of
Muswellbrook, NSW

study under way
na
2 Mt thermal,
2 Mt coking
na
Ulan
Mudgee, NSW
study under way
2010
nil (continuation
of mining
operations)
$500 m
Wallarah
underground longwall
NW of Wyong, NSW

study under way
late 2011
5 Mt thermal
$550 m
Wandoan opencut
60 km N of Miles,
Qld

study under way
2012
up to 22 Mt
thermal
US$1.6 b
(A$1.9 b)
Waratah Galilee coal

project
450 km W of
Rockhampton, Qld
New project, awaiting

govt approval
2013
up to 40 Mt
thermal
$7.5 b
Washpool coal
project
260 km W of
Rockhampton, Qld

study under way
2012
1.6 Mt of coking
$402 m
Winchester South
40 km S of
Moranbah, Qld

study under way
2013
4 Mt of coking
and thermal
na
Wonbindi
180 km W of
Gladstone, Qld

study under way
2013
3 Mt PCI and
thermal
na
Wongawilli Colliery
12 km W of Port
Kembla, NSW
study under way
na
nil (continuation
of mining
operations)
$62 m
Woori
19 km S of
Wandoan, Qld

study under way
2013
34 Mt thermal
coal
na
167
Source: ABARE 2009e
Table 5.13 Coal infrastructure at an advanced stage of development, as at October 2009

Project
Company
Location
Status
Start up
Capacity
Capital
Expenditure
Abbot Point Coal

Terminal X50
expansion
North
Queensland
Bulk Ports
Bowen, Qld
Expansion,
committed
mid
2011
Terminal capacity
increase from 25
to 50 Mtpa
$818 m
Abbot Point Coal

Terminal yard
refurbishment
North
Queensland
Bulk Ports
Bowen, Qld
Refurbishment,
committed
mid
2011
na
$68 m
Brisbane Coal
Terminal expansion
Queensland
Bulk Handling
Brisbane, Qld
Expansion,
under
construction
2010
1 Mtpa
$10 m
Coppabella to
Ingsdon rail
duplication
Queensland
Rail
Coppabella to
Ingsdon, Qld
Expansion,
committed
mid
2010
3 Mtpa
$80 m
Minimbah Bank
Australian
Third Rail Line Rail and Track
(stage 1)
Corporation
Minimbah to
Whittingham
(10km), NSW
Expansion,
under
construction
2010
na
$134 m
NCIG export terminal NCIG

(Newcastle Coal
Infrastructure Group)
Newcastle,
NSW
New project,
under
construction
2010
Capacity of 30
Mtpa initially;
ultimately 66 Mtpa
US$1.1 b
(A$1.3 b)
Source: ABARE 2009e
Table 5.14 Coal infrastructure at a less advanced stage of development, as at October 2009
168
Project
Company
Location
Status
Start up
Capacity
Capital
Expenditure
2 Export Terminal
Arrival Tracks
Australian
Rail and Track
Corporation
Newcastle, NSW
Expansion,
feasibility study
under way
2011
na
$50 m
Koolbury
Aberdeen
duplication
Australian
Rail and Track
Corporation
Koolbury
Aberdeen, NSW
Expansion,
feasibility study
under way
2013
na
$60 m
Kooragang Island
coal terminal
expansion
Port Waratah
Coal Services
Newcastle, NSW
Expansion,
feasibility study
under way
na
Capacity
increase to
be decided
To be
decided
Liverpool Range
rail project
Australian
Rail and Track
Corporation
Willow Tree
to Murrurundi
(30 km), NSW
Expansion,
feasibility study
under way
2012
Capacity
increase of
12.5 Mt
$290 m
Minimbah Bank
Australian
Third Rail Line Rail and Track
(stage 2)
Corporation
Maitland to
Minimbah
(32 km), NSW
Expansion,
planning approval
under way
2012
na
$300 m
Nundah Bank
3rd Road (rail)
Australian
Rail and Track
Corporation
Minimbah to
Maitland (30 km),
NSW
Expansion,
feasibility study
under way
2012
na
$125 m
Scone Parkville
Duplication
Australian
Rail and Track
Corporation
Scone Parkville,
NSW
Expansion,
feasibility study
under way
2013
na
$60 m
Western Rail Coal

Unloader
Delta Electricity
Mt Piper, 10 km
W of Lithgow,
NSW
New project, govt

approval received
2012
8 Mt
(ultimately)
$80 m
Abbot Point Coal

Terminal X110
expansion
North
Queensland Bulk
Ports
Bowen, Qld
Expansion,
EIS submitted,
on hold
2014
Terminal
capacity
increase from
80 to 110 Mtpa
$1.8 b
Abbot Point Coal

Terminal X80
expansion
North
Queensland Bulk
Ports
Bowen, Qld
Expansion,
EIS submitted,
on hold
2012
Terminal
capacity
increase from
50 to 75 Mtpa
$1.8 b
Balaclava Island
coal terminal
Xstrata
50 km N of
Gladstone, Qld
New project,
EIS under way
2014
35 Mtpa
$1 b
C H A PTE R 5: COAL
Project
Company
Location
Status
Start up
Capacity
Capital
Expenditure
Goonyella to
Abbot Pt (rail)
(X50)
Queensland Rail
North Goonyella
to Newlands
(70 km), Qld
Expansion,
final stages of
planning
early
2012
50 Mtpa
$1.1 b
Hay Point Coal

Terminal Phase 3
BHP Billiton
Mitsubishi
Alliance (BMA)
20 km S of
Mackay, Qld
Expansion,
feasibility study
under way
2014
Port capacity
increase from
44 to 55 Mtpa
$500 m
Moura Link
Aldoga Rail
Queensland Rail
Moura/Surat to
Mount Larcom,
Qld
New project,
EIS completed
mid
2013
na
$500 m
Surat Basin
Rail (Southern
Missing Link)
Queensland Rail/
ATECDV/ Xstrata
Coal
Wandoan to
Theodore
(210 km), Qld
New project,
EIS submitted
2012
42 Mtpa
haulage
capacity
ultimately
$1 b
Wiggins Island
Wiggins Island
Coal Terminal Coal Export
(stage 1)
Terminal
Gladstone, Qld
New project,
EIS under way
2012
25 Mtpa
$1.4 b
Wiggins Island
Wiggins Island
(stage 2)
Terminal
Gladstone, Qld
New project,
EIS under way
2016
Terminal
capacity
increase from
25 to 50 Mtpa
$1.4 b
Wiggins Island
Wiggins Island
(stage 3)
Terminal
Gladstone, Qld
New project,
EIS under way
2020
Terminal
capacity
increase from
50 to 70 Mtpa
$1 b
Source: ABARE 2009e
Table 5.15 Coal-fired electricity projects at various stages of development, as at October 2009
Project
Company
Location
Status
Start up
Capacity
Capital
Expenditure
Bluewaters
stage 2
Griffin Energy
5 km NE of
Collie, WA
Under
construction
late
2009
208 MW
$400 m
Eraring
Eraring Energy
40 km SW of
Newcastle, NSW
Committed
2011
240 MW
$245 m
Advanced Projects
Black coal
Less Advanced Projects

Black coal
Bluewaters
stages 3 and 4
Griffin Energy
5 km NE of
Collie, WA
EIS under way
2014
416 MW
na
Coolimba
Aviva Corporation
20 km S of
Eneabba, WA
EIS under way
2013
400 MW
$1 b
Wandoan Power
Project
Xstrata/GE
Energy
Surat Basin, Qld
Prefeasibility
study under way
2015-16
400 MW
na
ZeroGen stage 1
(demonstration
phase)
ZeroGen Pty Ltd
Rockhampton,
Qld
Feasibility study
under way
2012
120 MW
$1.7 b
ZeroGen stage
2 (commercial
phase)
ZeroGen Pty Ltd
to be determined,
Qld
Prefeasibility
study under way
2017
400 MW
$3 b
Arckaringa Altona Resources

Phases 1 & 2
200 km N of
Coober Pedy, SA
New project,
feasibility study
under way
2014
560 MW
$520 m
Arckaringa
Phase 3
200 km N of
Coober Pedy, SA
New project,
feasibility study
under way
na
280MW
na
Altona Resources
169
Project
Company
Location
Status
Start up
Capacity
Capital
Expenditure
FuturGas project
Strike Oil
Kingston, SA
Prefeasibility
study under way
2016
40 MW
na
HRL IDGCC
project
HRL Technology/
Harbin
Latrobe Valley,
Vic
Feasibility study
under way
2013
400 MW
$750 m
Brown coal
Source: ABARE 2009f
5.5 References
Economics), 2009a, Australian Energy Statistics,
Canberra, August
ABARE, 2009b, Australian Mineral Statistics, Canberra,
September
ABARE, 2009c, Australian Commodities, Canberra,
September
ABARE, 2009d, Australian Commodity Statistics,
Canberra, December
ABARE, 2009e, Minerals and energy major projects
October 2008 listing, Canberra, November
ABARE, 2009f, Electricity generation: major development
170
Australian Bureau of Statistics (ABS), 2009, Mineral and

Petroleum Exploration, Australia, catalogue no. 8412.0,
Canberra, September
Australian Coal Association (ACA), 2009, Coal and its uses,
<http://www.australiancoal.com.au/coal-and-its-uses.aspx>
APCRC (Australian Petroleum Cooperative Research Centre),
2003, GEODISC project (19992003)
BP, 2009, Statistical Review of World Energy, London
Carbon Storage Taskforce, 2009, National Carbon Mapping
and Infrastructure Plan Australia: Concise Report,
Department of Resources, Energy and Tourism, Canberra
Coal-to-Liquids Coalition, (n.d.), Technology: the technology
behind CTL, <http://www.futurecoalfuels.org/technology.
asp>
CSIRO, 2009, Review of energy conversion technologies.
Draft report to Department of Resources, Energy and
Tourism, July
Daniel R, 2006, CO2 seal capacity comparisons from
selected geological storage sites in Australia, APPEA
Conference Poster
DCC (Department of Climate Change), 2009, Australias
national greenhouse gas accounts, May 2009, <http://
www.climatechange.gov.au/climate-change/~/media/
publications/greenhouse-report/national-greenhouse-gasinventory-pdf.ashx>
Ekawan R, Duchene M and Goetz D, 2006, The Evolution
of Hard Coal Trade in the Pacific Market, Energy Policy, 34,
18531866
Geoscience Australia, 2008, Geological storage of carbon
dioxide fact sheet, <http://www.ga.gov.au/image_cache/
GA12133.pdf>
Geoscience Australia, 2009, Australias Identified Mineral
Resources, 2009. Geoscience Australia, Canberra,
<http://www.australianminesatlas.gov.au/aimr/index.jsp>
Gibson-Poole CM, Lang SC, Streit JE, Kraishan GM and
Hillis RR, 2002, Assessing a basins potential for geological
sequestration of carbon dioxide: an example from the
Mesozoic of the Petrel Sub-basin, NW Australia. The
Sedimentary Basins of Western Australia 3. Proceedings of
the PESA Symposium 2002, 439463
IEA, 2009a, Coal Information database, 2009 Edition, Paris
IEA, 2009b, World Energy Balances, 2009 Edition, Paris
IEA, 2009c, World Energy Outlook, OECD/IEA, Paris
Linc Energy, 2009, UCG, Linc Energy, Brisbane,
<http://www.lincenergy.com.au/ucg.php>
Metal Bulletin, 2008, Trading Iron Ore a full feasibility
study for a new derivatives contract 2008, Metal Bulletin,
London
RET (Department of Resources, Energy and Tourism), 2009,
Clean Energy Technologies, <http://www.ret.gov.au/energy/
Pages/index.aspx>
Sinclair Knight Mertz (SKM), 2009, Reducing Carbon
Emissions from Thermal Power Stations. Achieve,
<http://www.skmconsulting.com/Knowledge-and-Insights/
Achieve-Articles/2009/2009-reducing-carbon-termal-powerstations.aspx>
World Coal Institute, 2009, Where is coal found?, World
Coal Institute, <http://www.worldcoal.org/coal/where-iscoal-found/>
World Coal to Liquids (CTL) Association, 2009, Coal-toliquids: a global outlook, presentation, <http://www.worldctl2009.com/general.html>
World Energy Council, 2007, 2007 Survey of energy
resources, World Energy Council, London, United Kingdom
Chapter 6
Uranium and Thorium
6.1 Summary
Key messages

Australia has the worlds largest Reasonably Assured Resources of uranium and identified
recoverable thorium resources.
Australia is the worlds third largest producer of uranium. At present, there is no thorium production.
Currently Australia has three uranium mines operating, with two additional operations scheduled
to begin production in 2010.
World demand for uranium is projected to increase strongly over the next 20 years as new nuclear
capacity is commissioned.
Australias uranium production is forecast to more than double by 2030.
There are currently no plans for Australia to have a domestic nuclear power industry by 2030.
In the longer term there is potential for thorium-fuelled reactors, but currently there are no
commercial scale thorium-fuelled reactors anywhere in the world.
6.1.1 World uranium and thorium

Uranium and thorium can be used as nuclear
reactor fuel. Uranium is currently the preferred
fuel; thorium may be a future fuel.
World Reasonably Assured Resources (RAR)
recoverable at less than US$80/kg of uranium are
estimated to be around 3047 kilotonnes (kt U) at
the end of 2008. This is equal to about 50 years of
current nuclear reactor consumption levels.
World uranium mine production has increased
by an average 2.8 per cent per year since 2000,
reaching 24584 PJ (43.9 kt U) in 2008.
Secondary supplies of uranium from blended
highly enriched uranium (HEU), government stocks
and mixed oxide fuels accounted for around
32per cent of global uranium supply in 2008.
This compares with 44 per cent in 2000.
World uranium consumption has increased by
1.5per cent per year since 2000, reaching
36 176 PJ (64.6 kt U) in 2008. Nuclear power
accounted for 6.2 per cent of global primary
energy consumption and 14.8 per cent of world
electricity generation in 2007.
World demand for uranium is projected to
increase at 3.7 per cent per year to 2030,
reflecting the commissioning of new nuclear
capacity worldwide. Generation III reactors

incorporate advanced safety systems and have
improved fuel technologies; Generation IV
reactors, currently in research and development,
will utilise uranium more efficiently, minimise
waste and be proliferation resistant.
Thorium based fuels could be used in some

existing uranium-fuelled reactors possibly in the
medium term, but full scale commercial thoriumfuelled reactors are not likely before 2030.
6.1.2 Australias uranium and

thorium resources
Australia has the worlds largest RAR recoverable
at less than US$80/kg of uranium (US$80/kg U)
with 1163kt in this category at December 2008.
The estimated RAR for 2008 will last about 140
years at current Australian production levels.
Australia has substantial potential for the
discovery of new uranium resources.
New pre-competitive data released by
Geoscience Australia notably the radiometric
map of Australia and database are providing
a further stimulus to uranium exploration
and discovery.
Australia has a major share of the worlds
thorium resources. Estimated total recoverable
Identified Resources of thorium could amount
to about 490kt.
171
There is currently no exploration specifically

focused on thorium. All of the information
available on thorium resources has been
generated by exploration and mining activities
aimed principally at other mineral commodities.
Global demand for thorium is dependent upon

the development of widespread commercial scale
thorium-fuelled reactors for electricity generation.
There has been renewed interest in development
of thorium-fuelled reactors. This is partly because
of greater abundance of thorium resources in
some countries, greater resistance to nuclear
weapons proliferation, and a substantial reduction
in radioactive waste generated.

uranium and thorium resources
There is renewed interest worldwide in nuclear
power and hence demand for uranium is
expected to increase.
Successful exploration and development of
uranium deposits is dependent on several
factors including state government policy, prices,
production costs, ability to demonstrate best
practice environmental and safety standards,
and community acceptance of uranium
development.
Limited commercially viable transport options
and restriction of access to two ports may
limit expansion of Australian uranium exports.
A reduced number of shipping firms and routes
that accept uranium may result in further delays
and costs.
120
6.1.4 Australias uranium and

thorium market
Australia has three operating uranium mines:
Ranger open pit mine in the Northern Territory,
Olympic Dam underground mine and Beverley
in situ recovery (ISR) mine in South Australia
(figure 6.1). Two more ISR mines, Four Mile and
Honeymoon in South Australia, are expected to be
producing in 2010.
Australia has been a reliable producer of uranium
since the early 1950s. Australias uranium oxide
production in 200809 was 4872 PJ (8.7 kt U).
Australia is the third largest uranium producer
with 19.2 per cent of world production.
130
172
140
DARWIN
150
Ranger
10
750 km
Rare Earth Oxide deposits

Thorium 81 500 t

Thorium 42 600 t
20
Coastal Heavy Mineral
Sand deposits
Thorium 12 600 t
EUCLA BASIN
Heavy Mineral Sand
deposits
South West Coastal
Heavy Mineral Sand
deposits
Olympic
Dam
BRISBANE
Beverley
Coastal Heavy
Mineral Sand
deposits
Thorium 2300 t
PERTH
Thorium 600 t
Thorium 80 100 t
Geological regions with U3O8
SYDNEY
ADELAIDE
MURRAY BASIN
Heavy Mineral Sand deposits
Up to 1000 tonnes of U3O8

1000 to 10 000 tonnes U3O8
10 000 to 100 000 tonnes U3O8
100 000 to 1 000 000 tonnes U3O8
>1 000 000 tonnes of U3O8
Thorium 281 900 t
30

Thorium 35 000 t
MELBOURNE
Rare Earth Oxide deposit

Heavy Mineral Sand deposit
Uranium deposit
HOBART
40
Operating uranium mine

AERA 6.1
Figure 6.1 Australias total identified uranium and thorium resources, 2008
C H A P T E R 6 : U R A N I U M AND THOR IUM
14 000
12 000
Production
Exports
10 000
PJ
8000
6000
4000
2000
0
1979-80
1989-90
1999-00
2009-10
Year
2019-20
2029-30
AERA 6.2
Figure 6.2 Australias projected uranium supply-demand balance to 202930

Source: ABARE
Australia does not consume any of its domestic

uranium production. In 200809, Australia exported
4816 PJ (8.6 kt U) with an export value of A$1033
million. Australias major export destinations are the
United States, Japan and France.
Australian production of uranium oxide is
projected to increase by an average 6 per cent
per year to reach 11480 PJ (20.5 kt U) by
202930 (figure 6.2). All production is expected
to be exported.
Australian production and subsequent trade of
thorium is not likely to occur on a large scale
before 2030.
If commercialisation of a thorium fuel cycle
occurs more quickly than assumed, Australia
is well positioned to supply world markets with
low cost reliable sources of thorium. Currently,
thorium is being diluted and disposed of at the
mineral sand mine site, making these resources
uneconomic to recover in the future.
6.2 Uranium
6.2.1 Background information
and world market
Definitions
Uranium (U) is a mildly radioactive element that
is widespread at levels of one to four parts per
million (ppm) in the Earths crust. Concentrations of
uranium rich minerals, such as uraninite, carnotite and
brannerite can form economically recoverable deposits.
Once mined, uranium is processed into uranium oxide
(U3O8 ), also referred to as uranium oxide concentrate
(UOC) and is exported in this form. Natural uranium
(mine production) contains about 0.7 per cent of the
uranium isotope U235 and 99.3 per cent U238.
Enriched uranium is uranium with an enhanced

concentration of the U235 isotope, up from 0.7
per cent to between 3 and 5 per cent. Uranium
is required to undergo enrichment for use in
most civilian nuclear reactors. Like all thermal
power plants, nuclear reactors work by generating
heat, which boils water to produce steam to
drive turbines that generate electricity. In nuclear
reactors, the heat is produced from nuclear fission
of U235. Highly enriched uranium (HEU) is enriched
to 20 per cent or more U235 and weapons-grade
HEU is enriched to over 90 per cent.
Secondary sources arise from the reprocessing
of spent nuclear fuel, blended down HEU from
nuclear weapons, or mixed oxide fuels. Currently,
secondary sources supply a significant portion of
uranium demand for nuclear reactors.
Uranium supply chain

A conceptual representation of the Australian
uranium supply chain is given in figure 6.3. The
supply chain is divided into four distinct phases:
resources exploration; development and production;
processing, transport and storage; and end use
markets. Australias supply chain concludes with
the exporting of uranium oxide to countries for
processing, enrichment and use in nuclear power
plants.
Resources exploration
There is a wide variety of geological settings that
result in the formation of different types of uranium
deposits. The main areas of exploration activities in
Australia are:
Gawler Craton/Stuart Shelf region (hematite
breccia deposits) and Frome Embayment
(sandstone deposits) in South Australia,
173
Development and
Production
Resources Exploration
Exploration
decision
Development
decision
Storage
End Use Market
Processing
Plant
World
Market
Export Market
Project
Mine
Undiscovered
resources
Identified
resources
AERA 6.3
Figure 6.3 Australias uranium supply chain

Paterson Province (unconformity type deposits)

and Yilgarn Craton (calcrete type deposits) in
Western Australia,
Pine Creek and Arnhem Land regions
(unconformity type deposits) in Northern
Territory, and
174
Mt Isa region in Queensland (metasomatite

type deposits).
Exploration activities use geological and geophysical
methods to locate and delineate potential uranium
deposits. A deposit is systematically drilled and
assayed to quantify the grade and tonnage of the
deposit. The different types of deposits have a wide
range of ore grades, tonnage and ore minerals.
South Australia and Northern Territory maintain
the bulk of exploration activity. Uranium exploration
and mining are prohibited in New South Wales and
Victoria. Queensland has uranium resources, and
previously mined uranium, but currently has a policy
of no uranium mining. In late 2008, Western Australia
removed its six year ban on uranium mining, which has
resulted in renewed investment in uranium projects.

Once a resource has been quantified, a company
makes a decision on whether to proceed with
development based on underlying market conditions,
including commodity prices and the ability to finance
the project. If a decision to proceed with the project
is made, construction of a mine site and processing
facilities begins after approval by Australian and
state/territory governments.
In Australia, uranium is recovered using both
conventional and ISR mining techniques. Most of
Australias uranium production is from conventional
(open cut or underground) mining techniques,

followed by milling and metallurgical processing.
There is currently only one ISR mine, but several
more are expected to begin production in the short
term. ISR mining is widely used in Kazakhstan and
United States and accounts for about 28 per cent of
global uranium mine production. The process involves
recovering uranium without removing the ore body
from the ground. Uranium is extracted by means of
an acid or alkaline solution which is pumped down
injection wells into the permeable mineralised zone
to remobilise uranium from the ore body. The uranium
bearing solution is pumped to the surface and
recovered in a processing plant.
Processing, transport and storage

Conventionally extracted uranium is milled, and
then processed to produce U3O8. For ISR mining,
the uranium-bearing solution is pumped to a
processing plant and treated in much the same
way as conventional uranium operations. The U3O8
is not directly usable as a fuel for a nuclear power
reactor and additional processing (conversion and
enrichment) and fuel fabrication are required.
The processing path and amount of uranium required
annually by a 1000 megawatt electric (MWe) light
water reactor is illustrated in figure 6.4. The U3O8 is
converted into uranium hexafluoride (UF6), which is
then enriched to increase the proportion of uranium
isotope U235 from 0.7 per cent to between 3 and 5
percent. The enriched UF6 is converted to uranium
dioxide (UO2) and transferred to a fabrication plant.
Solid ceramic pellets containing UO2 are encased
in metal tubes to form fuel rods used in the nuclear
reactor. Typically, one tonne of uranium will produce
44 gigawatt hours of electricity (WNA 2009a).
Each stage of the fuel cycle produces some

radioactive waste, which is disposed of using proven
technologies. International conventions such as the
Joint Convention on Nuclear Safety and the Joint
Convention on the Safety of Spent Fuel Management
and on the Safety of Radioactive Waste Management,
assert that the ultimate responsibility for ensuring
the safety of spent fuel and radioactive waste
management rests with the state.
with Australia and, in the case of non-nuclear weapon

states, have an Additional Protocol, which ensures
the International Atomic Energy Agency (IAEA) has
access to and inspection rights in the recipient
country. These requirements apply also to third
party states that may be involved in processing and
transhipment of the material.
Australian uranium producers sell most of their
production through long term contracts. Only a small
amount of Australian uranium is sold on the world
spot market.
In the Australian uranium supply chain, uranium

mining generates tailings, the radioactivity of which
is low and is managed by disposal in site-specific
engineered tailings dams. The Australian regulatory
regime requires mines to be approved subject to best
practice environmental and safety standards.
Mining and
Milling
200 tonnes
of uranium
oxide (U3O 8 )
Conversion
Enrichment
170 tonnes
of uranium
as UF6
24 tonnes
of uranium
as enriched
UF6
At present uranium oxide is exported through the

Adelaide and Darwin container ports only. Uranium
oxide is shipped to international end use markets,
either directly or through countries which convert and
enrich the uranium and fabricate fuel. The uranium
is used in civilian nuclear power reactors to generate
electricity, and in the manufacture of radioisotopes
for medical applications.
Fuel
Fabrication
24 tonnes
as UO2 fuel
World uranium market
AERA 6.4
Table 6.1 provides a snapshot of the Australian

uranium market in a global context. Australia has the
worlds largest uranium resources and is the third
largest producer in the world.
Figure 6.4 Typical annual quantity of uranium required

for a 1000 MWe nuclear reactor
Source: Commonwealth of Australia 2006a
End use market
Resources
Australia does not have a domestic nuclear power

industry; all of Australias uranium production is
exported. Australia has stringent requirements for the
supply of uranium and nuclear material derived from
it. Receiving states must be a party to and comply
with the Treaty on the Non-Proliferation of Nuclear
Weapons, have a bilateral safeguards agreement
Uranium resources are categorised using the

OECD Nuclear Energy Agency (OECD/NEA) and the
IAEA classification scheme. The uranium resource
estimates are for recoverable uranium, which
deducts losses due to mining and milling. Uranium
recoverable at less than US$80/kg U is considered
to be economic at current market prices.
Table 6.1 Key uranium statistics, 2008

Resources
unit
Australia
OECDb
World
PJ
651 280
902 720
1 706 320
kt U
1163
1612
3047
Share of world
38.2
52.9
100.0
World ranking
no.
Production
PJ
4760
10 696
24 584
kt U
8.5
19.1
43.9
Share of world
19.2
43.6
100.0
World ranking
no.
1.4
-1.0
2.8
Annual average growth of production 200008

Consumption
PJ
30 408
36 176
kt U
54.3
64.6
Annual average growth of consumption 200008
0.1
1.5
Nuclear share of primary energy consumption
10.9
6.2d
Nuclear share of electricity generation
21.2
14.8d
a Reasonably assured resources recoverable at <US$80/kg U. Data for Australia compiled by Geoscience Australia and estimates for other
countries are from OECD/NEA-IAEA. b ABARE estimates. c Amount of uranium used in nuclear power plants. d 2007 data
Source: OECD/NEA-IAEA 2008, Geoscience Australia 2009, WNA 2009b, IEA 2009, ABARE 2009a
175
World total Identified Resources (RAR and Inferred

Resources) recoverable at less than US$80/kg U
were estimated to be 2.7 million PJ (4.85 million
tonnes U) at December 2008 (OECD/NEA-IAEA 2008,
Geoscience Australia 2009). At current rates of world
consumption for energy purposes this is enough to
supply approximately 75years.
Mine production
Uranium production is focused in a small number
of countries. In 2008, world uranium production
was 24584 PJ (43.9 kt U) with Canada (20.5 per
cent), Kazakhstan (19.4 per cent), Australia (19.2
per cent), and Namibia (10 per cent) accounting for
nearly 70 per cent of this production (WNA 2009b;
see figure 6.5). Australia was the worlds second
largest uranium producer from the mid-1990s
through to 2007. Kazakhstan production has
increased rapidly in recent years and in 2008 its
production exceeded Australian production for the
first time (WNA 2009b).
At December 2008, Australias total Identified

Resources (RAR and Inferred) recoverable at less
than US$80/kg U accounted for 33 per cent of
global resources (table 6.2). Other countries with
large resources include Kazakhstan (16 per cent),
the Russian Federation (10 per cent), Canada (9 per
cent) and South Africa (7 per cent).
Table 6.2 World total Identified Resources of uranium recoverable at less than US$80/kg U, 2008
Identified Resources
(RAR & Inferred)
<US$80/kg U
Australia
176
Reasonably Assured Resources

(RAR)
<US$80/kg U
kt U
Share of world %
kt U
Share of world %
1612.7
33.2
1163.3
38.2
Kazakhstan
751.6
15.5
344.2
11.3
Russian Federation
495.4
10.2
172.4
5.7
Canada
423.2
8.7
329.2
10.8
South Africa
343.2
7.1
205.9
6.7
Brazil
231.0
4.8
Namibia
230.3
4.7
a) Identified
157.4 Resources
Australia
Kazakhstan
5.2
145.1
4.8
126.5
4.1
44.0
1.4
99.0
3.3
Ukraine
184.1
3.8
Jordan
111.8
2.3
United States
99.0
2.0
Uzbekistan
86.2
1.8
Brazil
55.2
1.8
Other
284.6
5.9
Namibia
205.1
6.7
100.0
Ukraine
3047.3
100
Total
4853.1
Russian Federation
Canada
South Africa
Jordan
Source: Data for Australia compiled by Geoscience Australia and estimates for other countries are from OECD/NEA-IAEA. Figures are rounded
United States
to the nearest 100 tonnes
0
600 000
1 200 000
1 800 000
kt U
a) Identified Resources
b) Production
Australia
Canada
Kazakhstan
Kazakhstan
Russian Federation
Australia
Canada
Namibia
South Africa
Russian Federation
Brazil
Niger
Namibia
Uzbekistan
Ukraine
United States
Jordan
Ukraine
United States
China
0
600 000
1 200 000
1 800 000
kt U
Figure 6.5 World uranium resources and production, by major country, 2008
Source: OECD/NEA-IAEA
2006, 2008, WNA 2009b
b) Production
Canada
Kazakhstan
Australia
Namibia
AUSTRA L IRussian
AN EFederation
N E R GY R E S O U R C E A S S E S S M E NT
AERA 6.5
kt U
10
80
70
60
kt U
50
40
30
20
10
AERA 6.6
0
1972
1976
1980
1984
1988
1992
1996
2000
2004
2008
Year
Rest of the world
Russian Federation
Former East
Germany
Namibia
Former Soviet
Union
Kazakhstan
United States
Australia
Uzbekistan
Former
Czechoslovakia
Niger
Canada
Figure 6.6 World uranium production, by major producer

Source: OECD/NEA-IAEA 2006, 2008
World uranium production peaked at 39 032 PJ

(69.7 kt U) in 1980, reflecting strong demand
for uranium in non-energy uses and increasing
penetration of nuclear power (figure 6.6). At peak
production, the largest uranium producers were the
former Soviet Union, United States, Canada and East
Germany. Since 1980, production in most of these
countries has declined as a result of secondary
sources entering the market, driving down prices and
increasing competition and pressure on high cost
producers. World uranium production reached
80
70
60
Secondary
supplies
kt U
50
40
30
20
10
AERA 6.7
0
1950
1960
1970
1980
1990
2000
2008
Year
Production
Consumption
Figure 6.7 World uranium production and consumption

for energy purposes
Source: OECD/NEA-IAEA 2006, 2008, WNA 2009b, 2009c
a low of 17640 PJ (31.5 kt U) in 1994. Since then,

uranium production has increased steadily, reflecting
higher production in countries such as Australia,
Kazakhstan and Namibia.
Secondary supply
Uranium production consistently exceeded
requirements for energy purposes until 1989 (figure
6.7). Since 1990, global uranium demand for energy
purposes has exceeded mine production, with the
shortfall met from secondary supply sources.
Secondary sources include low enriched uranium
(LEU) produced by blending down highly enriched
uranium (HEU) from military stockpiles, mixed oxide
fuels (MOX), depleted uranium tails from enrichment
plants and government stocks (figure 6.8). Of these,
the largest source currently is from military stockpiles
of HEU, which are being progressively reduced under
the terms of a number of international agreements,
such as the United States-Russian Federation HEU
purchase agreement and the HEU feed deal. The
terms of these agreements will be complete after
2013, at which time there will be a consequent sharp
reduction in uranium supply from secondary sources.
The Euratom Supply Agency (2009) has forecast that
secondary supplies could decline to around 10 kt U
per year by 2030. Figure 6.8 illustrates a reference
case which incorporates these factors, and assumes
also no net changes in inventories and broadly
constant supplies from government stocks over the
177
period 2015-2025 and a decline in Russian supply

after that time.
20
18
MOX is formed by mixing plutonium oxide and

depleted uranium oxide. MOX is considered a
viable fuel option, and is expected to be used in
15 per cent of world reactors by 2010 (Euratom
Supply Agency 2009).
16
14
kt U
12
10
8
Consumption
Uranium is used as a fuel for nuclear power and to

produce medical and industrial isotopes. The nuclear
power industry requirements dominate.
4
2
AERA 6.8
0
2010
2015
2020
2025
2030
Year
Russian inventories,
tails, LEU/HEU
Western Europe
tails re-enrichment
Reprocessed
uranium/MOX
United StatesRussian HEU

downblend
agreement
United States sales/

tails re-enrichment
Figure 6.8 Sources of secondary supply in the world

uranium market, projections to 2030
Source: Geoscience Australia, based on data provided by WNA 2009
Between 1971 and 2008, uranium consumption

for energy purposes grew by an average 4 per cent
per year to 36 176 PJ, or 6 per cent of the worlds
primary energy consumption (IEA 2009). In 2008, the
largest consumers of uranium for power generation
were the United States, France and Japan (figure
6.9). During the 1990s, growth in uranium demand
slowed as fewer reactors were built compared with the
previous two decades. However, an increased focus
on energy diversification and the need to reduce global
greenhouse gas (especially carbon dioxide) emissions
in recent years has stimulated renewed interest in
nuclear power as a proven base load power source
and low emission technology.
70
178
60
50
kt U
40
30
20
10
AERA 6.9
0
1972
1976
1980
1984
1988
1992
1996
2000
2004
Year
World
United Kingdom
Germany
Japan
Rest of the world
Ukraine
Russian Federation
United States
Canada
Republic of Korea
France
Figure 6.9 World uranium consumption for energy generation, by major country
Source: OECD/NEA-IAEA 2006, 2008, WNA 2009c
2008
Trade
With the exception of Canada, uranium production is
focused in countries without significant enrichment
and conversion facilities, such as Australia,
Kazakhstan, Namibia and Niger. Reflecting this,
trade in U3O8 is common, although information on
world trade is often not publicly available due to
commercial sensitivities. Based on production and
consumption, the largest importers of U3O8 in 2008
were likely to have been the United States, Japan,
France, Germany and the Republic of Korea. The
largest exporters of uranium were likely to have been
Australia, Kazakhstan, Canada, Namibia and Niger.
World outlook for the uranium market to 2030

According to projections from the Energy Information
Administration (EIA), world electricity generation from
nuclear power is expected to increase by at least
45 per cent to 3844 TWh or 13838 PJ by 2030 (table
6.3; EIA 2009a). Growth in nuclear power is driven by
concerns over increasing demand for electricity, rising
fossil fuel prices, energy security, and greenhouse gas
emissions. Despite this growth, the share of nuclear
power as a proportion of world electricity generation is
projected to decrease, from 15 per cent in 2007 to
12 per cent in 2030 (EIA 2009a).
Key growth markets for nuclear power are projected

to be developing economies, where electricity
consumption will increase significantly over the
next 20 years. Countries with the largest growth in
nuclear power capacity are expected to be China
and India where growing energy demand and
favourable nuclear power policies are expected to
drive growth. Nevertheless, growth in non-OECD
Europe, Eurasia and North America are also likely to
play a role in increasing nuclear power production as
these economies maintain nuclear power electricity
generation in their energy portfolios.
Strong projected growth in nuclear power generation
implies a positive outlook for future uranium demand.
Based on EIA projections of world nuclear electricity
generation, ABARE has estimated future uranium
consumption by region (figure 6.10). Global uranium
consumption is projected to increase by an average
3.7 per cent per year to reach 104 kt U (58240 PJ)
by 2030. Non-OECD Asian economies are projected
to account for most of this growth, mainly reflecting
expansions to generating capacity in China and India.
There is considerable uncertainty surrounding
world economic growth, energy security, adoption of
greenhouse gas emission reduction targets, relative
Table 6.3 Projected nuclear electricity generation to 2030

Actual
Region/Country
179
Projections
Terawatt hours (TWh)
2006
2010
2020
2030
North America
891
928
992
1053
United States
787
809
862
907
93
108
120
135
OECD
Canada
Mexico
10
11
11
11
Europe
929
922
905
902
Asia
430
441
546
624
Japan
288
299
336
381
141
142
210
243
2250
2291
2443
2579
Europe and Eurasia
269
283
424
519
Russian Federation
144
155
251
328
124
128
173
191
111
151
455
678
China
55
65
274
425
India
16
37
104
149
Other Asia
40
48
77
104
31
37
62
68
The Republic of Korea

Australia/New Zealand
Total OECD
Non-OECD
Other
Asia
Other
Total Non-OECD
411
471
941
1266
Total World
2660
2761
3385
3844
Source: EIA 2009a
costs of generating technologies and changes in

policy relating to nuclear power. All present risks
to the consumption projections in figure 6.10. In
particular, there is potential for nuclear power,
and thus demand for uranium, to grow faster then
projected if the introduction of policies such as
emissions reduction targets reduce demand for
coal before alternative low emission energy sources
become economic.
120
100
The location of Australias uranium deposits and the

relative size of resources is shown in Figure 6.11.
kt U
80
The majority of Australias uranium resources occur in

four types of deposits which vary significantly in both
tonnage and grade:
60
40
20
AERA 6.10
0
2006
2009
2012
2015
2018
2021
2024
2027
2030
Year
180
Olympic Dam in South Australia is the worlds largest

known uranium deposit. In September 2009,
BHP Billiton released its annual report stating
improvements in metallurgical recovery for uranium
and revising ore reserves and mineral resources.
Reported ore reserves at Olympic Dam have increased
by 22 per cent and total mineral resources have
increased by 5 per cent. The deposit has not yet
been completely drilled out. Geoscience Australia
estimated that as at June 2009 Australias RAR
recoverable at less than US$80/kg U is 1210 kt U, an
increase of 4 percent compared with December 2008.
Other non-OECD
OECD Asia
Non-OECD Europe
and Eurasia
OECD Europe
Non-OECD Asia
OECD North
America
Figure 6.10 Projected world uranium consumption,

to 2030
Source: ABARE
6.2.2 Australias uranium resources

and market
Uranium resources
Australia has the worlds largest RAR of uranium
recoverable at less than US$80/kg U, with 1163 kt of
resources in this category at December 2008 (table
6.4; figure 6.11). Australia accounts for 38 per cent
of world RAR recoverable at less than US$80/kg U.
Based on current Australian production and RAR at
2008, the estimated resource life is about 140 years.
Australia has an additional 449 kt of uranium in
Inferred Resources recoverable at less than US$80/
kg U, which are also the worlds largest resources in
this category.
Hematite breccia complex deposits contain about

65 per cent of Australias total uranium resources
and all of these resources are at Olympic Dam
(South Australia).
Unconformity-related deposits account for about
20 per cent of Australias total resources. These
deposits are mainly in the Alligator River region in
the Northern Territory (Ranger, Jabiluka, Koongarra),
and in one deposit in the Rudall Province, Western
Australia (Kintyre). The unconformity-related deposits
have the highest average grades overall but show a
very wide range in size.
Sandstone deposits account for about 7 per cent
of Australias total known Identified Resources, and
occur mainly in the Frome Embayment region in
South Australia (Beverley, Four Mile, Honeymoon,
East Kalkaroo, Goulds Dam) and the Westmoreland
area in northwest Queensland (Redtree, Junnagunna,
Huarabagoo). Other significant sandstone type
deposits include Manyingee, Mulga Rock and
Oobagooma in Western Australia, and Angela in
Northern Territory.
Calcrete deposits have about 5 per cent of Australias
Identified Resources. Most calcrete deposits are low
grade. The world class Yeelirrie deposit is the largest
deposit of this type. Other calcrete deposits include
Lake Way, Lake Maitland and Centipede (Western
Australia).
Other types of uranium deposits in Australia include
metasomatite deposits (Valhalla, Skal and Andersons
Table 6.4 Australias uranium resources, December 2008
Reasonably Assured Resources (RAR)
unit
recoverable
<US$ 80/kg U
recoverable in range
US$ 80 130/kg U
kt
1163
13
Inferred Resources
kt
449
48
Total Identified Resources
kt
1612
61
120
130
140
Jabiluka 2
150
Ranger No. 3
DARWIN
Koongarra
750 km
10
Westmoreland
Oobagooma
Valhalla
Ben Lomond
Bigrlyi
Nolans Bore
Kintyre
Manyingee
20
Angela
Lake Way
Yeelirrie
BRISBANE
Mulga Rock
Four Mile
Beverley
Honeymoon
30
PERTH
SYDNEY
ADELAIDE
Resource range (t U3O8)

Total identified resources (RAR + inferred)
recoverable at costs < US$80/kg U
0 - 3000
3001 - 10 000
Olympic Dam resources are very

large and the circle for this deposit
is shown smaller than proportional size.
MELBOURNE
Railway
Road
10 001 - 50 000
HOBART
40
50 001 - 1 000 000

181
>1 000 000

AERA 6.11
Figure 6.11 Australias total identified uranium resources

Lode, Queensland). Australia has only small resources

within metamorphic (remnant resources at Mary
Kathleen, Queensland), volcanic (Ben Lomond,
Maureen, Queensland) and intrusive deposits
(Crocker Well, Mount Victoria, South Australia).
The major uranium ore minerals are uraninite
and pitchblende, though a range of other uranium
minerals are found in particular deposits. The total
initial size of Australian deposits as uranium oxide
grade and ore tonnage is plotted in figure 6.12.
Whether a deposit has potential for development
depends on several factors including the relative
tonnage to grade, for example, the Nabarlek mine
(Northern Territory) was high grade, but relative low
tonnage. In contrast, the Olympic Dam deposit has a
very large tonnage but the uranium grade is relatively
low. Although the uranium grade is low, Olympic Dam
is a major copper and gold producer which offsets
the cost of mining uranium.
Some 9 per cent of Australias RAR are classified
as inaccessible for mining. All uranium deposits in
Queensland are classified as inaccessible resources
because of the state governments policy banning

uranium mining. In the Northern Territory, the Jabiluka
and Koongarra deposits are currently classified as
inaccessible resources, as approval from Traditional
Owners is required before these deposits can be
developed.
There are several major undeveloped deposits that
may be developed if proven economically feasible
and all necessary approvals are granted. Table 6.5
summarises the total ore reserves and mineral
resources of the main undeveloped deposits as
reported by resources companies.
Uranium market
Production
Currently, Australia has three operating mines,
Energy Resources of Australias Ranger open pit
mine in the Northern Territory, BHP Billitons Olympic
Dam underground mine and Heathgate Resources
Beverley ISR mine in South Australia. In addition,
there are two ISR mines, Alliance Resources and
Quasar Resources Four Mile and Uranium Ones
Honeymoon, expected to be producing in 2010.
10
10
0m
mt
00
0t
00
00
mt
00
10
10
10
00
0t
00
0t
00
10
10
10
10
10
1t
0 .1
Koongarra
Jabiluka
0.0
Beverley
Four Mile West
Kintyre Yeelirrie
Honeymoon
1t
U3
O8
Uranium grade (U 3 O 8 %)
Narbarlek (former)
Four Mile East
0.1
Ranger
Mount Gee
0.0
Mulga Rock
01
t
Olympic Dam
AERA 6.12
0.01
10 0
10 1
10 2
10 3
10 4
10 5
10 6
10 7
10 8
10 9
10 10
Uranium ore (tonnes)

Mineral deposit
Mine (including projects under development)
Figure 6.12 Australian mines and deposits (total resources, including past production and current remaining)
by grade and tonnage
Table 6.5 Major undeveloped uranium deposits in Australia

Deposits
182
Ore reserves
Mineral resources
contained U3O8 (kt)
Northern Territory
Jabiluka 2
67.70
Koongarra
14.50
73.94
Bigrlyi
10.59
Angela
9.89
Mt Gee
31.30
4 Mile West
15.00
Crocker Well & Mt Victoria
6.74
Valhalla
25.90
Westmoreland (Redtree, Junnagunna, Huarabagoo, Sue & Outcamp)
23.62
Yeelirrie
56.53
Kintyre
31.90
Mulga Rock
24.52
Manyingee
10.90
Oobagooma
9.95
Centipede-Millipede-Abercombie
5.04
Lake Maitland
8.32
82.20
344.14
South Australia
Queensland
Western Australia
Total
Note: Ore reserves and mineral resources are company estimates
10 11
Between 1954 and 1971, Australia produced a total

of about 7.7 kt U from five mines, Radium Hill (South
Australia), Mary Kathleen (Queensland), Rum Jungle
(Northern Territory) and two sites in the South Alligator
Valley (Northern Territory). The mines were developed
to satisfy contracts with the United Kingdom Atomic
Energy Authority and the Combined Development
Agency, a joint United Kingdom and United States
uranium purchasing agency. These mines were closed
after fulfilling their contracts.
Increasing prices in the early 1970s as a result of
improved demand for uranium for energy purposes
led to the reopening of Mary Kathleen in 1975
and the opening of two new mines in the Northern
Territory, Queensland Mines Nabarlek mine and
Energy Resources of Australias Ranger mine, in
1979 and 1980 respectively (figure 6.13). Australian
mine production increased strongly until the mid
1980s when both Nabarlek and Mary Kathleen mines
were closed. The Olympic Dam operation, a major
new mine in South Australia, commenced production
in 1988, and offset some of the mine closures.
However, reduced demand for uranium as a result of
increased availability of secondary supplies resulted
in Australias uranium production declining until the
mid-1990s.
Australian uranium production has expanded
strongly over the past 10 years as producers have
responded to growing export demand. South Australia
has contributed to most of this growth, reflecting
the expansion at Olympic Dam in 1999 and the
development of the Beverley mine in 2001. Capital
expenditure on the Beverley mine was A$30million;
it has a capacity of 1 kt U3O8 per year. The 1999
Olympic Dam expansion had a capital cost of nearly
A$2billion, which increased the capacity of the mine
10
kt U
In 2008, Australia was the worlds third largest

uranium producer, accounting for 19 per cent
of world production. Australia produced around
4872PJ (8.7kt U) in 200809 from three operating
mines. Ranger accounted for 54 per cent of
Australian mine production while Olympic Dam
produced 40 per cent and the Beverley operation
accounted for around 6 per cent of Australias
uranium production.
2
AERA 6.13
0
197576
198081
198586
199091
199596
200001
2005- 200806
09
Year
Queensland
Northern
Territory
South
Australia
Figure 6.13 Australian uranium production, by state

Source: ABARE 2009c
to 4.3 kt U3O8 per year (table 6.6), together with

increased copper and gold production. Production at
the Ranger mine in the Northern Territory has also
contributed to higher production over this period.
The addition of a radiometric sorter and laterite
processing plant in 2008 and 2009 respectively
will support higher production at the Ranger operation
in the future.
Consumption
Australia does not consume any of its locally
produced uranium. A small amount of low enriched
uranium is imported for use at Australias Nuclear
Science and Technology Organisations (ANSTO)
Lucas Heights OPAL research reactor. The research
reactor provides medical isotopes for nuclear
medicine and treatment, scientific research and
irradiation of industrial materials. In 2008, Australias
consumption of uranium totalled less than 100 kg of
low enriched uranium (ASNO 2009).
Trade
Australia exports all its uranium (figure 6.14) to
countries within its network of bilateral safeguards
agreements, which ensure that it is used only
for peaceful purposes and does not enhance or
contribute to any military applications.
Table 6.6 Recent developments at current Australian mines

Project
Company
State
Start up
Production
capacity
kt U3O8 /
year
Capital
Expenditure
A$m
(nominal)
Olympic Dam 1999 expansion
BHP Billiton
SA
1999
4.3
1940*
Beverley ISR mine
Heathgate Resources
SA
2001
1.0
30
Ranger radiometric sorting plant
Energy Resources of Australia
NT
2008
1.1
19
Ranger laterite plant
Energy Resources of Australia
NT
2009
0.4
44
*Capital expenditure covers total expansion of copper-gold-uranium-silver mining

Source: ABARE
183
Table 6.7 Australias uranium exports to end-users,

2008
U3O8
kt
Share of total
%
United States
4.381
45.3
Japan
2.281
23.6
France
1.015
10.5
Republic of Korea
0.387
4.0
Sweden
0.340
3.5
China
0.313
3.2
Canada
0.256
2.7
Taiwan
0.243
2.5
United Kingdom
0.171
1.8
Spain
0.107
1.1
Finland
0.092
1.0
Germany
0.076
0.8
Total
9.662
100.0
Australian mining companies supply uranium

under long-term contracts to electricity utilities
in United States, Japan, China, the Republic of
Korea, Taiwan and Canada as well as members of
the European Union including the United Kingdom,
France, Germany, Spain, Sweden, Belgium and
Finland. In 2008, Australias largest uranium export
destination was the United States (45 per cent of
total exports), followed by Japan (24 per cent) and
France (10 per cent) (table 6.7). Australias uranium
exports contain sufficient energy to generate more
than twice Australias current annual electricity
demand (Commonwealth of Australia 2006a).
In 200809, Australia exported 4805 PJ (8.58 ktU)
valued at $1033 million (ASNO 2009). This was
13 per cent higher than in 200708 ($914 million
in 200809 dollars) despite a modest decline in
export volumes. The value of Australias uranium
export earnings has increased significantly over
the past 15 years, reflecting growth in both export
volumes and prices (figure 6.15; ABARE 2009a, b).
Source: ASNO 2009
6000
5000
Production
PJ
4000
184
Exports
3000
2000
1000
0
1975-76
1983-84
1991-92
1999-00
Year
2007-08
AERA 6.14
Figure 6.14 Australias uranium supply-demand balance
1300
1040
780
520
260
kt U
10
0
1975-76
2008-09 A$
Source: ABARE 20009b
0
1983-84
1991-92
1999-00
2007-08
Year
Export volume
(kt U)
Real export value

(A$)
Figure 6.15 Australias exports of uranium

Source: ABARE 2009c
AERA 6.15
Uranium is commonly traded through long term

contracts which are negotiated in both price (spot
and long term) and quantity terms. In Australia,
uranium producers sell most of their production
through these long term contracts. Only a small
amount of Australian uranium is sold on the world
spot market. Historically, secure contract prices
have been negotiated for long time periods. More
recently an industry trend of indexing contract
prices to spot prices has emerged, although most
of Australias current long term contracts do not
have these provisions.
As most trade is conducted through long term
contracts, the uranium spot market is illiquid (small
number of buyers and sellers) which can lead to
volatility in prices. Reflecting this, the average
export price for Australian uranium producers has
been considerably less volatile than the spot price
in recent years (figure 6.16). In late 2008, the spot
price was also influenced by the development of a
futures market resulting in speculative purchases of
uranium by investment companies.
In the future, it is likely that an increasing number
of Australian producers will sell their production on
the spot market, reflecting the small size of many
of the planned uranium operations. If this occurs,
Australian uranium producers may be exposed to
increased volatility in export earnings. It is also
possible that future long term contracts may
be linked to spot prices, further contributing to
income volatility.
140
120
Spot price
Australian export unit value
2008 US$/lb
100
80
60
40
20
AERA 6.16
0
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
Year
Figure 6.16 Uranium spot prices and average Australian export unit prices
Source: ABARE 2009c, Ux Consulting 2009
6.2.3 Outlook to 2030 for Australias

The outlook to 2030 is based on Australia continuing
to be a major producer and exporter of uranium as
nuclear fuel to world markets. There are no plans for
Australia to have a commercial nuclear power industry
or enrichment facilities; all of Australias uranium
production will continue to be exported. There is
renewed interest worldwide in nuclear power. Demand
for reliable supplies of uranium will therefore grow to
meet the continued expansion of electricity generation
from nuclear power.
Australia has the largest uranium resources in
the world; there are several significant known
but undeveloped deposits, and there is a strong
likelihood of new resource discoveries from the
exploration of prospective areas currently under way.
In the medium to long term, Australias production
of uranium is expected to increase significantly,
reflecting Australias large low cost uranium
resources, proposed new mines and increasing
export demand.
Australias uranium production is projected to more
than double from 4872 PJ (8.7 kt U) in 200809 to
11 760 PJ (21 kt U) by 202930.

A report to government on uranium mining, processing
and nuclear energy in Australia (Commonwealth
of Australia 2006a) noted that Australia was well
positioned to increase production and export
of uranium to meet market demand and that
downstream steps of uranium conversion,
enrichment and fuel fabrication could add a further

A$1.8 billion of value annually if Australian uranium
was processed domestically. The report noted
however that there were commercial, technology
and regulatory impediments.
The report also considered issues associated
with the potential development of nuclear power
in Australia and concluded that even if the current
legislative impediments were removed it would be
at least 10 years and most likely 15 years before
nuclear electricity could be delivered. By then,
Generation IV reactors, which use uranium more
efficiently, result in less waste and are less conducive
to nuclear weapon proliferation, are likely to be the
industry standard.
World demand for uranium as a nuclear fuel is
expected to continue to grow with the expansion
of nuclear power worldwide. The factors that will
influence demand include:
Commitment to greenhouse gas emissions
reduction targets,
Increased demand for low emission electricity
generation provided by nuclear power,
Increased demand for new reactors that provide
increased security and safety, generate less
radioactive waste and are more resistant to
nuclear weapon proliferation, and
Conversely, increased efficiency of these reactors,
which may constrain the expected growth in
uranium demand through more efficient use
of uranium and the ability to use reprocessed
nuclear fuel.
185
As a reliable and secure supplier of uranium to

the world market, Australia is well placed to meet
a significant proportion of any increased demand
for uranium for use as an energy resource. Any
expansion of Australian uranium production and
exports to meet this demand will be influenced by
several factors, including;
Significant potential for new uranium discoveries,
Undeveloped deposits that are capable of being
developed at low cost,
Limited port and shipping company options for
export uranium, and
Uranium mining prohibitions in Queensland,
New South Wales and Victoria.
Cost competitiveness increased global competition

Australia is well placed to make a greater contribution
to meeting the projected increase in global demand
for uranium because of its large low cost uranium
resources and the potential to develop projects at the
lower portion of the cost curve. Australia is a reliable
supplier of uranium, which is of strategic importance
to utilities.
186
The capital costs vary with mining method. In general,

ISR operations are lowest cost, with underground and
open pit mines being more expensive per tonne of
uranium produced. For an operation of comparable
size, open cut mining may be less capital intensive
than underground mining. However, large scale bulk
underground operations that achieve economies of
scale can be comparable to open cut operations.
Conventional open cut and underground mining is the
most common extraction technique in the uranium
industry, accounting for around 72 per cent of world
uranium production, with ISR accounting for the
remaining 28 per cent (WNA 2009b).
The differences in cost are dependent in part on ore
grade and type, infrastructure requirements, and
economies of scale. Operating costs are dependent
on the metallurgical process required to produce U3O8.
Uranium deposits comprising uraninite typically have
a relatively simple acid leach metallurgy process with
estimated production costs of US$1530 per pound

U3O8. Calcrete deposits commonly require alkali leach
and can have higher production costs of US$3550
per pound U3O8 (TORO Energy Limited 2008).
Cost pressures have influenced the development
of uranium mines. In 2007 and 2008, input costs
increased dramatically, reflecting rising costs for
fuel, labour, power and acid for processing. Recently
there has been some indication that cost pressures
have eased in the mining sector following the global
economic downturn, with the price of major inputs
declining. However, this fall may be only short-lived,
with cost pressures likely to return once demand for
energy and mineral commodities returns.
A further factor which may increase the cost of
developing a mine is the site itself the more remote
and difficult the location, the higher the infrastructure
costs (Schodde and Trench 2009).
In general, the next generation of uranium
development projects worldwide will be lower average
grade and of smaller deposit size than the currently
operating mines. Many existing mining operations
are planning expansions, which may result in new
development projects being deferred until mines
close or demand grows significantly. Expansions of
existing mines are generally less capital intensive
than greenfield projects.
Over the past decade, growth in new uranium mines
has been slow and concentrated in a small number
of countries, mainly Kazakhstan, Namibia and Niger.
Of the seven major mines developed since 2006,
five were ISR developments (table 6.8).
ISR mines tend to be smaller with a limited surface
disturbance, hence capital costs are lower than
conventional mines reflecting reduced infrastructure
requirements. However, ISR is only suitable for
deposits in sandstones which are water saturated
and in which the mining solutions can be contained.
It is estimated sandstone hosted uranium deposits
account for approximately 20 per cent of world
uranium resources and 7 per cent of Australias total
uranium resources (OECD/NEA and IAEA 2008).
Table 6.8 Uranium projects completed recently worldwide

Project
Location
Mining
method
Commenced
production
Capacity
kt U3O8/
year
Capital cost
US$m
(nominal)
Unit cost
US$/t U3O8
(nominal)
Kayelekera
Malawi
Open cut
2009
1.65
167
101 212
Irkol
Kazakhstan
ISR
2009
0.88
Kharasan (1 & 2)
Kazakhstan
ISR
2009
5.9
430
72 931
West Mynkuduk
Kazakhstan
ISR
2008
1.18
Moinkum (Muyunkum)
Kazakhstan
ISR
2006
0.59
90
152 542
Langer Heinrich
Namibia
Open cut
2006
1.18
120
101 781
Zarechnoye
Kazakhstan
ISR
2006
1.18
60
50 891
Note: ISR = in situ recovery, Capacity is the nominal target production capacity
Source: WNA Country briefs
Table 6.9 Costs of Australian ISR uranium projects

Project
State
Production
commencement
Capacity
kt U3O8/year
(nominal)
Capital cost
A$m
Unit cost
A$/t
(nominal)
Beverley
SA
2000
Four Mile*
SA
2010
1.00
58
58 000
1.36
112
Honeymoon
SA
2010
82 400
0.40
118
295 000
* Four Mile operation is using the processing facilities at Beverley

Source: ABARE
In Australia, there is one operating ISR mine

(Beverley) and two ISR projects approved for
development (table 6.9). Capital costs per unit of
production vary considerably between these three
projects reflecting the time of construction. The Four
Mile ISR project has an expected capital cost per
tonne of capacity of A$82 400. The low unit cost
of the Four Mile operation is because the mined
material will be processed at the nearby Beverley
operation. In contrast, the Honeymoon operation has
an expected capital cost of A$295000 per tonne of
capacity, reflecting the additional cost of constructing
a processing facility.
The time and cost of the approval process is
an additional factor in development costs. In
Australia, new and expanding uranium mines require
environmental and development approvals prior to
any development occurring. The approval process
period for the development of a uranium mine can be
lengthy and costly if it is not well managed. Companies
are required to provide a detailed environmental
assessment for a uranium development proposal,
which is assessed by both Australian and state/
territory governments before approval to develop
is granted. As demonstration of the detail involved
in this process, BHP Billiton recently released
an Environmental Impact Statement (EIS) for the
proposed Olympic Dam expansion, which is a three
stage project from a current production of 4.3 kt to 19
kt per year of U3O8. Reflecting the complexity of the
expansion and changes to project configuration, the
EIS took the company nearly five years to complete.
The approval process is expected to take at least
another year. In contrast, the small Four Mile ISR
project (South Australia) producing 1.36kt U3O8 per
year will take less than five years from discovery to
production, which reflects, in part, the type of mine
and the fact that the operation will use pre-existing
processing facilities at the adjacent Beverley mine.
Secondary supply continues to fill demand

The uranium requirement for nuclear reactors
is currently met from both mined uranium and
secondary supply. Secondary supply from blending
down highly enriched uranium (HEU) is expected to
decline from 2013 (figure 6.8), but uranium from
reprocessed nuclear fuel may play an important role
in supplying uranium to met demand.
According to Euratom, reprocessing is an attractive

option, both environmentally and economically
(Euratom Supply Agency 2009). Euratom considers
that the process not only provides secondary supply
(referred to as reprocessed uranium, or RepU) but also
reduces the volume, and level of radioactivity, of highlevel waste material. It also reduces the possibility of
plutonium being diverted from civilian use. Technically,
at least, recovered uranium and plutonium can be
recycled as fresh fuel, with a potential saving of up
to 30 per cent of the natural uranium that would
otherwise be used.
Almost 90 kt (of the 290 kt discharged) of used
fuel from commercial power reactors has been
reprocessed. There are reprocessing plants in
France, Japan, the Russian Federation and the
United Kingdom, and annual reprocessing capacity
is now some 4 kt per year for normal oxide fuels.
Between 2009 and 2030 around 400 kt of used fuel
is expected to be generated worldwide, which is a
potential secondary source (WNA 2009e).
Technology developments new generation

of nuclear reactors
Currently there are 436 nuclear power reactors in
operation in 30 countries requiring around 65 kt U
per year. There are 53 reactors under construction
in several countries including China, India, the
Republic of Korea and the Russian Federation. Over
135 reactors are planned with approvals, funding
or firm commitments in place; they are expected
to be in advanced stages of construction, if not in
actual operation, within eight years. There are 295
further reactors proposed in over 30 countries.
These proposals are expected to result in reactors in
operation within 15 years (WNA 2009f). Altogether,
there are about 482 reactors under construction,
planned or proposed.
The nuclear power industry has been developing
and improving reactor technology for more than five
decades (box 6.1). Generation I prototype reactors
were developed in the 1950s. Generation II reactors
were developed as commercial reactors in the late
1960s, and are currently operating for electricity
generation in most countries with nuclear power.
Over the last 20 years many of these reactors have
received extensions of operating licences from 40
to 60 years. In addition there have been increased
187
operating efficiencies and improved maintenance

which have resulted in increased capacity and
electricity output. In the United States, the average
capacity factor increased from 56 per cent in 1980 to
over 90 per cent in 2002 (EIA 2009b). Worldwide, the
average unit capacity factor from 2006 to 2008 was
82.4 per cent (IAEA 2009). Consequently, electricity
generation has increased markedly over the two
decades despite little increase in installed capacity.
Generation III (and III+) reactors incorporate improved
fuel technology, thermal efficiency and passive
safety systems. The first Generation III reactors have
been operating in Japan since 1996. Generation III
reactors are currently being built (and planned to be
built) in many countries.
Generation IV reactors are still being designed and
none have been built to date. The Generation IV
International Forum, representing 13 countries,
has selected six reactor technologies which will
form the future of the nuclear power industry
(box 6.1). Generation IV reactors will operate at
higher temperatures (in the range 500C to 1000C)
than current commercial light water reactors (less
than 300C). The technology and design of these new
reactors are aimed at:
188
using passive safety features which require no

active controls or operational intervention to avoid
accidents in the event of malfunction;
being more resistant to diversion of materials for
weapons proliferation, and secure from terrorist
attack;
using the uranium fuel efficiently by using U238 and
plutonium, as well as all the U235; and using spent
fuel from current commercial reactors;
utilising uranium up to 60 times more efficiently;
and
greatly reducing amounts of high level radioactive

waste compared with current reactors.
Generation IV reactors will have a lower demand
for uranium due to the more efficient fuel burn and
will minimise high level waste sent to repositories.
These nuclear reactors will alter the nature and scale
of high level radioactive waste (HLW) disposal by
substantially reducing the volume of these wastes
(Commonwealth of Australia 2006a). Less HLW
and less heat generated from radioactive waste
(compared with current spent fuel) will enable more
effective use of geological HLW repositories. Current
planning for HLW repositories in many countries is
based on assessment of the amount of waste from
current commercial reactors. This will be modified
when Generation IV reactors become commercially
viable and advanced fuel processing is successful.
It is too early to determine which of the Generation IV
technologies will be commercially adopted.
Best practice sustainable uranium projects

The Australian Government supports the development
of uranium deposits in line with worlds best practice
environmental and safety standards. New uranium
mines are subject to approval by the Australian and
state/territory governments. Development of uranium
mines is permitted in South Australia, Northern
Territory, Western Australia and Tasmania. New South
Wales and Victoria have legislated against uranium
exploration and mining. Queensland government policy
bans the development of uranium mines.
Uranium mining proposals involve integrated
consideration under both the Commonwealth
Environment Protection and Biodiversity Conservation
Act 1999 (EPBC Act) and state/territory legislation.
Regulation of all mines in Australia focuses on
the outcomes to be achieved and is largely the
responsibility of state/territory authorities.
The principles and approaches for all mining
Box 6.1 Generation I to IV reactor technologies

Nuclear reactors have been in commercial operation
since the 1950s with reactors evolving from early
designs (Generation I) to five Generation II reactor
designs which today account for most nuclear reactors
operating in the world. Reactors currently under
construction are Generation II and III (III+) reactors.
utilisation, minimised waste and decreased cost to

build and operate. The six Generation IV systems
selected are:
Generation III reactors have standardised more

robust design with inherent safety features and
higher burn-up to maximise use of fuel and reduce
the amount of waste created. The standardised
design is reducing capital cost and construction time.
Very-High-Temperature Reactor (VHTR) a graphitemoderated, helium cooled reactor with a once-through

uranium fuel cycle;
Generation IV reactors are currently in research and

development and are not expected to be available
for commercial construction before 2030. The goals
of the Generation IV reactors are improved nuclear
safety, proliferation resistance, increased fuel
Gas-Cooled Fast Reactor (GFR) a fast-neutronspectrum, helium cooled reactor and closed fuel cycle;
Supercritical-Water-Cooled Reactor (SCWR) a hightemperature, high pressure water cooled reactor;

Sodium-Cooled Fast Reactor (SFR) features a fastspectrum, sodium cooled reactor and a closed fuel
cycle for efficient conversion of fertile uranium and
management of actinides;
Lead-Cooled Fast Reactor (LFR) features a fast

spectrum lead of lead/bismuth eutectic liquid-metalcooled reactor and a closed fuel cycle for efficient
conversion of fertile uranium and management of
actinides;
Molten Salt Reactor (MSR) uses a circulating
molten salt fuel mixture with an epithermal-spectrum
reactor and a full actinide recycle fuel cycle.
Nuclear reactors in operation

Table 6.10 provides an overview of the types of
nuclear reactors currently in operation and under
construction, followed by a summary of the features
of the five common nuclear reactors types.
Pressurised Water Reactors (PWR) and Boiling Water
Reactors (BWR) are collectively referred to as Light
Water Reactors (LWR). These reactors are cooled and
moderated using ordinary water (fresh or seawater).
The designs are simpler and cheaper to build than
other types of nuclear reactor, and they are likely to
remain the dominant technology for the present.
Table 6.10 Nuclear reactors in operation or under
construction, by reactor type, in 2009
no.
GW(e)
Pressurised Water Reactors
264
243.1
Boiling Water Reactors
92
83.7
Operational
Pressurised Heavy Water Reactors

Gas Cooled Reactors
Light Water Graphite-moderated
Reactors
Fast Breeder Reactors
Total
44
22.4
18
8.9
16
11.4
0.7
436
370.2
43
39.9
Under Construction
Pressurised Water Reactors
1.3
Boiling Water Reactors
3.9
Fast Breeder Reactors
1.2
Light Water Graphite-moderated

Reactors
0.9
53
47.2
Total
Source: IAEA
Pressurised Water Reactors (PWR)

The PWR consist of a primary and a secondary
circuit of water; both circuits are closed systems.
The primary circuit contains pressurised water (to
prevent it from boiling) which is heated to over 300C
as it moves through the reactor core. Once heated,
water in the primary circuit circulates through heat
exchangers which boil water in a secondary circuit.
Steam produced in the secondary circuit drives a
turbine to produce electricity the water is then
condensed and returned to the heat exchangers to
be transformed back into steam. PWR are the most
common nuclear reactors. There are 264 generating
units currently in operation with a total capacity of

243.1 gigawatts electric (GWe).
Boiling Water Reactors (BWR)

BWR utilise a similar method to the PWR except that
a single circuit is used to heat water and produce
steam to generate electricity. Water in the circuit
is maintained at a low pressure allowing it to boil
at around 285C. The water is condensed and
returned to the core to be transformed back into
steam. BWR have a less complicated design and are
often cheaper to build; however this cost advantage
is often offset by the increased costs incurred as a
result of residual radiation on turbines. They are the
second most common reactor design, accounting
for around 21 per cent of the worlds 436 nuclear
reactors.

(PHWR)/CANDU reactors
The PHWR or CANDU reactors are designed to use
low enriched uranium directly as a fuel. The PHWR
use a similar design to the PWR with a reaction in
the core heating a coolant in a primary circuit which
is then used to boil water in a secondary circuit.
The PHWR differ from the PWR in that heavy water
(water containing deuterium) is used as a coolant.
The fuel rods are cooled by a flow of heavy water
under high pressure in the primary cooling circuit.
The pressure tube design means that the reactor
can be refuelled progressively without shutting down.
Forty four PHWR are currently in operation (around
40 per cent in Canada) with a combined capacity
of 22.4 GWe.
Gas Cooled Reactors (GCR) and

Advanced Gas-cooled Reactors (AGR)
GCR are considered safer than traditional water
cooled reactors as the cooling properties of gas do
not change with temperatures. The GCR use natural
uranium fuel and the AGR use an enriched uranium
dioxide fuel. Carbon dioxide is used as coolant which
circulates through the core, reaching 650C before
passing through a steam generator creating steam
in a secondary circuit. In the 1980s, following the
success of LWR, the United Kingdom made the
decision to adopt LWR technology. As a result no
gas cooled reactors have been built since.
Light water graphite-moderated reactors (LWGR)

The LWGR are Russian-designed, based heavily on
the BWR. The design operates with enriched uranium
dioxide fuel at high pressure and uses water as a
coolant which is allowed to boil at around 300C.
This design can have a positive feedback problem
that results in excessive heat being released from
the core. For this reason there are no plans to
build new LWGRs beyond the one currently under
construction. Currently, 16 of these reactors are
in operation in the Russia Federation and Lithuania.
Source: WNA 2009g, h
189
have helped achieve increased trust by

stakeholders through a clear up-front agreement
on the environmental outcomes to be achieved
and a demonstration by the mining operator that
environmental, social and economic elements of
the project are being managed appropriately.
The Australian Government and the jurisdictions
that currently permit uranium mining (South
Australia, Northern Territory and Western Australia)
are developing a national ISR uranium mining
best practice guide, to ensure that ISR proposals
represent best practice environmental and safety
standards. The guide outlines and discusses the
general principles and approaches that should apply
to all mining in Australia, before considering ISR
uranium mining more specifically.
190
Government and is tracked and accounted for in the

international nuclear fuel cycle.
Any significant expansion of uranium exports will
require improved access to transport options.
Currently, uranium producers can export from only two
ports, Darwin in the Northern Territory and Adelaide in
South Australia.
In South Australia, uranium exports through the
Adelaide port will continue to grow as planned
projects such as Honeymoon and Four Mile
commence shipping uranium through this port. In
addition, the Olympic Dam Expansion has explicit
plans to export uranium through both Adelaide and
Darwin container ports with the uranium transported
by train to both of these destinations.
With regard to radiation protection in mining, state

and territory governments adopt the regulatory
approach outlined in the Code of Practice and Safety
Guide on Radiation Protection and Radioactive Waste
Management in Mining and Mineral Processing
(2005) produced by the Australian Radiation
Protection and Nuclear Safety Agency (ARPANSA).
Western Australian uranium production is likely to

commence in the medium term with projects such
as Yeelirrie and Kintyre potentially entering
production. Current plans for uranium transport is
by road to rail heads where it would be loaded onto
trains and transported to the Darwin or Adelaide
ports for export.
Sustainable growth of the uranium industry requires

community engagement to communicate the
environmental and safety practices built into the
project and to demonstrate that there are effective
regulatory controls. Engagement, consent and land
use agreements with Indigenous communities are
essential in areas where Indigenous groups hold
rights over or interests in the land.
Uranium oxide is classified as a Class 7 Dangerous

Good and it is transported by rail, road and sea in
200 litre drums packed in shipping containers.
The Australia Governments Uranium Industry

Framework (UIF) Steering Group was established in
2005 to identify opportunities for, and impediments
to, the further development of the Australian
uranium mining industry over the short, medium
and longer term while ensuring worlds best
environmental, health and safety standards. An
Implementation Group was established to progress
the recommendations from the UIF Steering Group
report (Commonwealth of Australia 2006b). The
priorities to date include: development of a national
radiation dose register for uranium workers;
helping facilitate discussion of uranium exploration
and mining issues with Indigenous communities;
addressing concerns about the transport of
uranium and instances of global denials and delays;
establishing nationally accredited radiation safety
training programs; and reviewing regulation applying
to the uranium industry.
Transportation issues
In Australia, exporting any radioactive material, such
as U3O8, requires an export permit. Export permits are
assessed by the Australian Government to ensure that
Australias uranium is exported to countries for peaceful
purposes under Australias network of bilateral
safeguards agreements. Each shipment of uranium
leaving Australia must be reported to the Australian
There are increased international transport constraints

affecting Class 7 goods, such as the consolidation
of the international shipping industry and associated
reduction in scheduled routes, and reduction in ports
where vessels carrying uranium can call or transit, even
where this cargo remains on board. The consolidation of
shipping firms and denial of routes result in increased
delays and costs to the uranium industry. International
transport issues, such as denial of shipping, are being
progressed through the IAEAs International Steering
Committee on Denial of Shipping.
Outlook for uranium resources

Uranium deposits are known in all states (except
Victoria and Tasmania, which only have uranium
occurrences) and Northern Territory. Favourable
geological settings and limited exploration since
1980 mean that there is significant potential for
discovering new deposits. New discoveries are
likely to significantly increase Australias resource base
and encourage further exploration in surrounding areas.
Uranium exploration expenditure in Australia has
increased since 2003 mainly because of the
significant increases in spot market uranium prices,
which reached a peak in July 2007 (US$136/lb U3O8)
and subsequently declined during 2008 (figure 6.17).
In 2008, uranium exploration expenditure reached a
record of A$220.5 million (ABS 2009a). The majority
of expenditure was in South Australia (42 per cent),
followed by the Northern Territory (26 per cent),
Queensland (19 per cent) and Western Australia.
A large number of new companies have been floated

in recent years specifically to explore for uranium.
World uranium exploration budgets in 2009 totalled
US$664 million, down from US$1151 million in
2008. Australia received 26 per cent (US$175
million) making it the second largest after Canada
which received 29 per cent (Metals Economics Group
2009). According to the Metal Economics Group there
were 319 companies engaged in uranium exploration
worldwide of whom 124 had active exploration in
Australia.
Historically uranium exploration in Australia has
been highly successful (figure 6.18). Of the 85
currently known uranium deposits in Australia,
approximately 50 were discovered from 1969 to
1975 with another four discovered from 1975 to
2003. Annual expenditure on uranium exploration in
Australia fell progressively for 20 years from the peak
in 1980 until 2003 due to low uranium prices. The
most recent significant discovery was the Four Mile
deposit in South Australia in 2005, which is the first
new uranium mine proposal to be approved by the
Australian Government since 2001.
More recently, discoveries of new uranium deposits
have not significantly increased Australias resources.
Growth in Australias uranium resources in recent
years has been largely due to ongoing delineation
of resources at known deposits. The Olympic Dam
deposit in South Australia has been the major
contributor to increases in Australias uranium
resources since 1983.
The recent strong exploration activity saw the reporting
of a number of intersections of economic interest,
including in the Pine Creek area, Northern Territory

and Frome Embayment, South Australia. Whether
intersections of uranium result in a new deposit will
depend on further exploration. The discovery year
for a deposit may not be acknowledged until some
years later, after subsequent exploration work. For
example the discovery year for the Olympic Dam
deposit was 1975, but it was a few years later before
the full significance of the discovery was appreciated;
moreover, the published resources are still growing.
Discovery of new deposits takes time and requires
considerable exploration expenditure. Exploration is
an uncertain activity with only a small percentage
of exploration expenditure leading directly to the
discovery of an economic resource. However,
exploration is important to developing new deposits
and sustaining existing operations by replacing
resources as deposits are mined. The price of uranium
and future export demand are typically the most
important factors affecting the level of expenditure
in exploration as these factors influence the return
on a deposit and the capital available to operations.
Not all discoveries turn into mines. Recent studies
found that less than half of the uranium discoveries
made in the world since the 1970s have been
developed into mines (R Schodde, personal
communication 2009). A major factor for the high
level of failed projects is the low grade and/or small
size of these discoveries. Only the best projects are
developed; the rest are placed in inventory waiting
better prices or improved business conditions.
Australia has a rich uranium endowment that is related
to the widespread occurrence of uranium enriched
felsic igneous rocks (Lambert et al. 2005). Major
140
120
191
70
60
Exploration expenditure 2008 A$
50
80
40
60
30
40
20
20
10
US$/lb
100
0
March 1989
A$ million
Uranium spot price 2008 US$
AERA 6.17
March 1991
March 1993
March 1995
March 1997
March 1999
March 2001
March 2003
March 2005
March 2007
0
March 2009
Year
Figure 6.17 Australian exploration expenditure and uranium spot prices in real dollars
Source: ABS 2009a, Ux Consulting 2009. Note: Expenditure and spot prices are quarterly figures
magmatic events during the Precambrian era (especially

the Proterozoic) produced the greatest volumes of
uraniferous igneous rocks, which are widespread
in South Australia, Northern Territory and parts of
Western Australia and Queensland. There is a clear
spatial relationship between known uranium deposits
and uranium-enriched bedrocks. While some uranium
deposits appear to have formed during these thermal
events, such as Olympic Dam, most uranium deposits
have formed from subsequent lower temperature
processes that redistributed and concentrated the
primary uranium to form new ore minerals.
World uranium resources are dominated by

sandstone, breccia complex and unconformity style
deposits. Unconformity deposits are dominant in
Australia and Canada. Australia has the worlds
largest resources of uranium recoverable at low
cost, principally in the Olympic Dam hematite breccia
deposit and the unconformity-related deposits
of Ranger and Jabiluka. Major sandstone hosted
uranium resources are known in Kazakhstan and the
United States. Australia has only a small proportion
of the worlds resources in sandstone type deposits.
In addition, uranium deposits related to magmatic
processes appear under-represented in Australia
given the abundance of uranium-rich igneous rocks
(Skirrow et al. 2009).
In general, uranium mineralisation is younger than

the spatially related igneous rocks. This is the
case for sandstone, calcrete and unconformity
related deposits that appear to have formed as a
result of remobilisation of uranium from older-uranium
enriched rocks. In particular, the Cainozoic calcrete
deposits in the western part of the continent,
including the large Yeelirrie deposit,
are spatially related to the Archaean felsic rocks;
and the unconformity related deposits are spatially
associated with the Palaeoproterozoic to late
Archaean felsic igneous rocks. Sandstone deposits
are widely distributed in Australia. Those in the
Frome Embayment, South Australia are believed
to be derived from the adjacent exceptionally
uranium-rich Proterozoic felsic rocks.
There are no published estimates for Australias

undiscovered uranium resources. Geoscience Australia
has undertaken a preliminary assessment of specific
undiscovered uranium deposits related to sedimentary
basins, such as unconformity and sandstone
hosted deposits. This quantitative assessment for
undiscovered uranium deposits was based on uranium
ore density distribution in sedimentary basins that
have the necessary geological features to form
unconformity and sandstone type deposits. The
assessment does not include the hematite breccia
complex or calcrete deposits, which currently account
for about 65 per cent and 5 per cent of Australias
uranium resources respectively.
192
1200
240
220
RAR recoverable at <US$80/kg U (kt U)
200
1000
900
Beverley 1969
40
20
Oobagooma 1980
600
500
400
300
200
100
AERA 6.18
0
1967
1970
1975
1980
1985
1990
1995
2000
2005
Year
Figure 6.18 Australias annual uranium exploration expenditure, discovery of deposits and growth of uranium
resources
2008
kt U
Mulga Rock 1978
700
4 Mile 2005
60
800
Kintyre 1985
80
Olympic Dam, Ben Lomond 1975
100
Jabiluka 1,
Honeymoon, Maureen 1971
120
Junnagunna 1976
140
Jabiluka 2, Angela 1973

Manyingee 1974
160
Yeerlirrie, Lake Way 1972
180
Ranger, Nabarlek,
Koongarra, Bigrlyi 1970
Exploration expenditure (A$ million - constant 2008$)
1100
Uranium exploration expenditure (A$)
Geological settings considered favourable to host

unconformity-related deposits, such as the Ranger
deposit, exist in other areas in the Northern Territory
and Western Australia. A quantitative assessment
for those basins with all of the necessary geological
features suggest that there is a 50 per cent
probability that these basins contain up to 400 kt of
undiscovered U3O8 in unconformity-related deposits.
Australia has many large sedimentary basins, many
of which have had only limited or no exploration for
sandstone hosted uranium deposits. The known
paleochannel sandstone hosted deposits are located
in about 3 to 5 per cent of known paleochannels
which means some 95 percent of paleochannels are
unexplored and considered favourable for uranium
mineralisation. It is reasonable to conclude that
there is high potential for discovery of significant
further sandstone hosted uranium resources in
Australia. Recent intensive exploration has resulted
in new discoveries such as Four Mile and Pepegoona
(Beverley North) deposits in the Frome Embayment
area, South Australia.
A quantitative assessment of suitable basins to host
sandstone type deposits suggest that even if 10 per
cent of the suitable basins were prospective there is
a 50 per cent chance that these basins contain up to
370 kt U3O8 in sandstone type deposits.
Regional and national assessments being undertaken
as part of the Australian Governments Onshore
Energy Security Program (OESP) are scheduled to
finish in mid 2011 (Geoscience Australia 2007). The
OESP is aimed at boosting investment in exploration,
especially in greenfield areas, by delivering reliable,
pre-competitive geoscience data. There are several
outputs being delivered, some of which include:
the radiometric map of Australia, which facilitates
rapid assessment of uranium prospectivity from
the national scale through to the local scale;
geochemical survey of Australia, which provides
airborne electromagnetic (AEM) surveys, seismic

acquisition and processing in under-explored
areas that are considered to have potential for
uranium and thorium mineralisation; and
developing a new understanding of uranium
mineralisation processes.
Outlook for uranium market

Uranium supply-demand balance
In the medium to long term, Australias production
of uranium is expected to increase significantly
reflecting Australias large low-cost uranium
resources, proposed new mines and increasing world
demand for uranium. World demand is projected
to grow strongly over the outlook period given the
projected strong growth in world nuclear electricity
generation. Given that there are no plans for Australia
to have a commercial nuclear power industry or
enrichment facilities prior to 2030, all of Australias
uranium production will continue to be exported
(figure 6.19).
In the medium term, Australias mine production is
forecast to increase by around 8 per cent per year to
reach 6170 PJ (11 kt U) by 201415 (ABARE 2010).
Potential growth in uranium production is expected to
come from Four Mile, Honeymoon, Oban and Crocker
Well projects in South Australia and Yeelirrie, Kintyre,
Lake Maitland and Wiluna uranium projects in
Western Australia. In addition, plans are underway
to expand underground operation at the existing
Olympic Dam mine.
Based on planned projects and the likelihood
of additional currently less advanced projects
(discussed further below) entering production before
2030, ABARE projects Australian uranium
25
14 000
12 000
10 000
a nation-wide dataset on the geochemical

composition of surface and near-surface materials;
Production
20
Exports
15
PJ
kt U
8000
6000
10
4000
5
2000
0
1989-90
1999-00
2009-10
Year
2019-20
2029-30
0
1989-90
1999-00
2009-10
Year
AERA 6.19
2019-20
2029-30
AERA 6.20
Figure 6.19 Projection of Australias uranium supplydemand balance to 202930
Figure 6.20 Projection of Australias uranium production

to 202930
Source: ABARE
Source: ABARE
193
mine production will increase at an average annual

rate of 12 per cent to around 11 760 PJ (21 kt U)
by 202930 (figure 6.20). It should be noted that
only uranium projects that have progressed to,
or beyond, a pre-feasibility stage of development
are included in this figure. Although other projects
are likely to enter production over this period, they
have not been included given the limited nature of
information available on these projects. Projects that
are likely to contribute most notably to this growth
include the phased expansion of Olympic Dam and
the development of Yeelirrie in Western Australia
which collectively could add as much as 20 kt U to
Australias existing uranium mine capacity.
Australias uranium exports are projected to increase
in line with higher production, reaching 11 760 PJ
by 202930.
Uranium project developments in Australia

Australia has a large number of uranium mining
projects planned to enter production over the next
decade (table 6.11, box 6.2). If all of these projects
are realised, Australian uranium mine production
capacity has the potential to increase from around
8.5 kt U per year up to 21.5 kt U by 202021. The
supply forecasts are based on current reported
resources. In practice, it is highly likely that additional
ore reserves will be found and mine lives extended
and possibly expanded. Figure 6.21 illustrates this
potential growth in mine capacity, assuming all
projects begin production at times announced by
project developers. It should be noted that some of
these projects will not be realised in the time frame
announced; this is taken into account in ABAREs
uranium production projections presented
in figures 6.19 and 6.20.
Table 6.11 Uranium development projects
194
Project
Company
Location
Status
Scheduled
production
start
Capacity
kt U3O8/
year
(nominal)
Capital
A$m
(nominal)
Honeymoon ISR
UraniumOne/
Mitsui
NE of Adelaide, SA
Under
construction
2010
0.4
118
Four Mile ISR
Alliance
Resources/
Quasar Resources
N of Adelaide, SA
Mine development
approved
2010
1.36
112
Ranger pit
extension
Energy Resources
of Australia
E of Darwin, NT
Put on hold while

alternative options
are considered
2011
na
57
Olympic Dam
expansion stage
1 - optimisation
BHP Billiton
Roxby Downs, SA
EIS under way
2016
4.5
na
Olympic Dam
expansion stage 2
BHP Billiton
Roxby Downs, SA
EIS under way
2018
14.5
na
Olympic Dam
expansion stage 3
BHP Billiton
Roxby Downs, SA
EIS under way
2021
19
na
Oban ISR
Curnamon Energy
N of Cockburn, SA
EIS under way
2010
0.2
na
Yeelirrie
BHP Billiton
N of Kalgoorlie,
WA
EIS under way
2014
na
Crocker Well and

Mount Victoria
Pepinnini
Minerals/ Sino
Steel
W of Broken Hill,
SA
Feasibility study
under way
2011
0.4
160
Bigrlyi
Energy Metals/
Paladin Energy
NW of Alice
Springs, NT
Pre-feasibility
study under way
2012
0.6
70
Wiluna Uranium
Project
Toro Energy
SE of Wiluna, WA
Pre-feasibility
study completed
2013
0.73
162
Valhalla
Summit
Resources/
Paladin
Resources
N of Mt Isa, Qld
On hold
na
Initially 2.7
Increasing
4.1
400
Lake Maitland
Mega Uranium /
JAURD / Itochu
SE of Wiluna, WA
Scoping study
completed
2012
0.75
102
Mt Gee
Marathon
Resources
NE of Leigh Creek,
SA
Scoping study
completed
2013
400
Westmoreland
Laramide
Resources
NW of Burketown,
Qld
On hold
na
1.36
317
Source: ABARE 2009d
22
20
Olympic Dam
Expansion 3
18
Olympic Dam Expansion 1
16
Yeeliree
14
12
kt U
Centipede Lake Way

Bigrlyi
Lake Maitland
Crocker Well
Oban ISR
10
Olympic Dam
Expansion 2
Mount Gee
Four Mile ISR
Beverley ISR
Honeymoon ISR
Olympic Dam
Ranger
0
1989-90
AERA 6.21
1994-95
1999/00
2004-05
2009-10
2014-15
2019-20
2024-25
2029-30
Year
Figure 6.21 Potential Australian uranium mine capacity

Source: ABARE
195
Box 6.2 Uranium project developments in Australia

Projects that are expected to enter production during
2010 include Four Mile and Honeymoon operations
in South Australia. Alliance Resources and Quasar
Resources, a wholly owned subsidiary of Heathgate
Resources, plan to develop the Four Mile ISR mining
operation with the resin trucked 8 km to Heathgate
Resources Beverley plant for recovery of uranium
(table 6.11). Production is scheduled to commence in
2010 with a projected production rate of 1.36 kt U3O8
per year. Uranium Ones Honeymoon ISR operation is
planned to commence production in mid 2010. The
operation is expected to produce 0.4ktU3O8 per year
with a six year mine life. In addition, Curnamona Energy
is undertaking ISR field leach trials at the small Oban
deposit (65 km north of Honeymoon mine) and plans to
be in commercial production in late 2010.
Of the major uranium projects planned, BHP Billitons
proposed Olympic Dam expansion is the largest. The
proposed expansion will increase uranium production
from the current capacity of 4 kt U3O8 per year to
approximately 19 kt U3O8 per year. This expansion is
based on a very large open pit to mine the southeast portion of the deposit. Mining of ore from
the open pit is currently scheduled to commence
in 2016.
Energy Resources of Australia Ltd (ERA) is planning
to construct a heap leach facility to process
existing low-grade ore at its Ranger operations in
the Northern Territory. A 10 million tonnes per year
dynamic heap leach facility will be constructed
to recover about 1520 kt U3O8 contained in low
grade mineralised material. The leach solutions
will be treated in a process similar to that used
in the existing Ranger plant. In January 2009,
ERA announced the discovery of a very significant
ore body at depth adjacent to the current Ranger
3 operating pit. The company is planning an
underground exploration drilling program to
evaluate the extent and continuity of the ore body.
A planned pit expansion has been put on hold while
the underground option is explored.
6.3 Thorium
6.3.1 Background information
and world market
Definitions
Thorium (Th) is a naturally occurring slightly radioactive
metal, three to five times more abundant than uranium.
The most common source of thorium is a rare earth
phosphate mineral, monazite (WNA 2009i).
Thorium is a potential future nuclear fuel through
breeding to U233. Thorium has the potential to
generate significantly more energy per unit mass of
thorium than uranium (WNA 2009h).
Historically there has been only one commercial scale
thorium-fuelled nuclear plant the Fort St Vrain reactor
in the United States that operated between 1976 and
1989. It was a high-temperature (700C), graphitemoderated, helium-cooled reactor with a thorium/HEU
fuel designed to operate at 330 megawatt electric
(MWe) capacity. Almost 25 tonnes of thorium was
used in fuel for the reactor (WNA 2009i).
Currently, there are no commercial scale thoriumfuelled reactors in the world and therefore no
demand for thorium as a fuel. Any future largescale commercial demand for thorium resources
will depend on development of economically viable
thorium-fuelled reactors.
196
Thorium supply chain

Figure 6.22 provides a representation of the
potential thorium supply chain in Australia. As with
uranium, the supply chain is divided into four distinct
processes: resources exploration; development and
production; processing transport and storage; and
end use markets.
Development and
Production
Exploration
decision
As most of the thorium resources in Australia are

in known heavy mineral sand deposits, thorium
production could be initiated with the recovery of
thorium and rare earth elements from the monazite
in operating heavy mineral sand mines without the
need for an exploration phase.
World thorium market

Currently, there are no commercial scale thoriumfuelled reactors. However research continues in
countries with abundant thorium but little uranium
resources.
Resources
Thorium resources are categorised according to
the OECD/NEA-IEA classification scheme. OECD/
NEA-IAEA published in 2008 estimates of thorium
resources on a country-by-country basis. The
estimates are subjective because of variability
in the quality of the data, much of which is old
and incomplete. Table 6.12 has been derived by
Geoscience Australia from information presented
in the OECD/NEA-IAEA analysis. The total Identified
Resources refer to RAR plus Inferred Resources
recoverable at less than US$80/kg thorium
(US$80/kg Th).
World RAR of thorium recoverable at less than
US$80/kg Th are estimated at 1.2 million tonnes,
with total Identified Resources estimated at 2.6
million tonnes (OECD/NEA-IAEA 2008). However, in
the absence of large scale demand for thorium, there
is little incentive to undertake further work to convert
Inferred Resources to RAR.
Australias total recoverable Identified Resources
of thorium amount to 490 kt (Geoscience Australia
2009), nearly one-fifth of total world identified
thorium resources.
Storage
End Use Market
Processing
Plant
World
Market
Export Market
(potential)
Development
decision
Project
Mine
Undiscovered
resources
Identified
resources
AERA 6.22
Figure 6.22 Potential Australian thorium supply chain

Table 6.12 World total Identified Resources of thorium, 2007
Country
Reasonably Assured
Resources
<US$ 80/kg Th
kt
Australia
Inferred Resources
<US$ 80/kg Th
Total Identified Thorium

Resources
<US$ 80/kg Th
kt
kt
76
6.3
414
29.4
490
18.7
United States
122
10.1
278
19.7
400
15.3
Turkey
344
28.6
NA
NA
344
13.2
India
319
26.5
NA
NA
319
12.2
Brazil
172
14.3
130
9.2
302
11.6
Venezuela
NA
NA
300
21.3
300
11.5
Norway
NA
NA
132
9.4
132
5.1
Egypt
NA
NA
100
7.1
100
3.8
Russian Federation
75
6.2
NA
NA
75
2.9
Greenland
54
4.5
NA
NA
54
2.1
Canada
NA
NA
44
3.1
44
1.7
South Africa
18
1.5
NA
NA
18
0.7
Others
23
1.9
10
0.7
33
1.3
1203
100.0
1408
100.0
2610
100.0
Total
Source: Data for Australia compiled by Geoscience Australia; estimates for all other countries are from OECD/NEA-IAEA 2008
Table 6.13 World and Australian thorium resources according to deposit type
World
Major deposit type
Australia
Resources
(kt Th)
Recoverable
Resources (kt Th)
Carbonatite
1900
31.3
24
4.9
Placer
1524
24.6
340
69.3
Vein-type
1353
21.4
73
14.9
Alkaline
1155
18.4
53
10.8
Other
258
4.2
Total
6190
100.0
490
100.0
Modified after OECD/NEA-IAEA (2008). Note: Australias thorium resources expressed as recoverable resources after an overall reduction
of 10 per cent for mining
OECD/NEA-IAEA (2008) have grouped thorium

resources according to four main types of deposits
as shown in table 6.13. Thorium resources worldwide
appear to be moderately concentrated in carbonatite
type deposits (carbonate mineral rich intrusives), which
account for about 30 per cent of the world total. The
remaining thorium resources are more evenly spread
across the other three deposit types in decreasing
order of abundance, in placers (sand deposits), vein
type deposits, and alkaline rocks. In Australia, a larger
proportion of resources is located in placers, with
heavy mineral sand deposits accounting for about
70per cent of known thorium resources.
World production, consumption and trade

World production and consumption data are
unavailable, but current production and consumption
are thought to be negligible. There are at present
no commercial scale thorium-fuelled reactors for
electricity generation in the world. Reasons for the

lack of a thorium based nuclear fuel cycle in the past
have included the high cost of thorium fuel fabrication
and the abundance of cheap uranium fuel for the
established uranium based reactors.
However, research into the thorium fuel cycle has
continued, because it is considered to be less
conducive to the proliferation of nuclear weapons,
results in reduced nuclear waste, and represents
increased energy security for countries with abundant
thorium but little in the way of uranium resources.
The construction of a 500 MWe prototype fast
breeder reactor has commenced at Kalpakkam, India.
This reactor will have a plutonium based core and a
thorium-uranium (Th232 U238) blanket and will breed
both U233 from thorium and plutonium239 (Pu239) from
the uranium in the blanket. The reactor is expected
to be operating in 2011. India is also planning to
197
complete a 300 MWe technology demonstration

thorium-fuelled Advanced Heavy Water Reactor
(AHWR) after 2017. However, full commercialisation
of the AHWR is not expected before 2030.
the heavy mineral sands are estimated to be around

377.7 kt Th. Australias total indicated and inferred in
situ resources, including those in predominantly rare
earth element deposits, amount to about 544 kt Th
(table 6.14).
6.3.2 Australias thorium resources

and market
As there are no publicly available data on mining

and processing losses for extraction of thorium
from these resources, the recoverable resource
of thorium is not known. However, assuming an
arbitrary figure of 10 per cent for mining and
processing losses in the extraction of thorium, then
the recoverable thorium resources could amount to
about 489.6 kt Th. About 75.7 kt of this is RAR of
recoverable thorium at less than US$80/kg Th.
Australia has the worlds largest Identified Resources

of thorium. Almost three quarters of Australias
thorium resources are in the mineral monazite within
heavy mineral sand deposits.
Thorium resources
Geoscience Australia estimates Australias monazite
resources in the heavy mineral deposits to be around
6.2 million tonnes and inferred thorium resources in
Table 6.14 Australias thorium resources, 2008

unit
In situ
recoverable
<US$ 80/kg Th
kt
84
75.6
Inferred Resources
kt
460
413.9
Total Identified Resources
kt
544
489.6
Reasonably Assured Resources (RAR)
120
198
130
140
150
10
DARWIN
750 km

Thorium 81 500 t
Thorium 42 600 t
20
Coastal Heavy Mineral Sand deposits
Thorium 12 600 t
BRISBANE
EUCLA BASIN
Heavy Mineral Sand
deposits
Coastal Heavy Mineral Sand deposits

Thorium 600 t
Thorium 2300 t
PERTH
South West Coastal

Rare Earth Oxide deposits 30
Thorium 80 100 t
Thorium 35 000 t
SYDNEY
ADELAIDE
MURRAY BASIN
Thorium 281 900 t
MELBOURNE
Relative size of Thorium resource

Rare Earth Oxide deposit
Heavy Mineral Sand deposit
HOBART
40
AERA 6.23
Figure 6.23 Australias total in situ identified thorium resources

About three quarters of Australias thorium resources

are in the rare earth-thorium phosphate mineral
monazite within heavy mineral sand deposits, which are
mined for their ilmenite, rutile, leucoxene and zircon
content (figure 6.23). Most of the known resources of
monazite in mineral sands are in Victoria and Western
Australia. The monazite in Australian heavy mineral
sand deposits averages about 6 per cent thorium and
60 per cent rare earths. Prior to 1996, monazite was
being produced from heavy mineral sand operations
and exported for extraction of rare earths. Other
thorium deposits are discussed in
Box 6.3.
Production of monazite no longer occurs in Australia

as the high disposal cost of thorium is considered
to make the extraction of rare earths from monazite
uneconomic.
In current heavy mineral sand operations, the

monazite is generally dispersed back through
the original host sand (to avoid the concentration
of radioactivity) when returning the mine site to an
agreed land use. In doing so, the rare earths and
thorium present in the monazite are negated as
a resource because it would not be economic to
recover the dispersed monazite for its rare earth
and thorium content. The monazite content of heavy
mineral resources is seldom recorded by mining
companies in published reports.
The full commercialisation of a thorium fuel cycle

is unlikely to take place prior to 2030. As a result,
large scale Australian production and subsequent
trade of thorium are not likely within this time
period. If commercialisation of a thorium fuel cycle
occurs more quickly than assumed, Australia is
well positioned to supply world markets with cheap
reliable supplies of thorium. Large resources of
thorium at deposits currently exploited for other
minerals and the possible development of multi
mineral deposits containing thorium are likely to
support this production.
Thorium market
Historically, Australia has exported large quantities
of monazite from heavy mineral sands mined
in Western Australia, New South Wales and
Queensland, for the extraction of both rare earths
and thorium. Between 1952 and 1995, Australia
exported 265 kt of monazite with a real export
value (2008 dollars) of A$284 million (ABS 2009b).
However, since production ceased in 1995 it is
believed no significant quantities of thorium, or
materials containing thorium, have been imported
or exported by Australia.
6.3.3 Outlook to 2030 for Australias

There is currently no large scale demand for
thorium resources and therefore no comprehensive,
reliable body of data either on resources or projected
demand. Australia has a major share of the worlds
thorium resources, based on limited information
available.

There has been a significant renewal of interest in
development of a thorium-fuelled nuclear cycle for
electricity generation, partly because of the relative
abundance of thorium, its greater resistance to
nuclear weapons proliferation and the substantial
reduction in radioactive waste generated from a
thorium-fuelled nuclear cycle. However, much work
remains to be done before a commercial scale
thorium-fuelled reactor for electricity generation can
become a reality.
Box 6.3 Thorium deposits in Australia

Apart from heavy mineral sand deposits (placer
deposits), thorium is present in other geological settings
such as alkaline intrusions and in veins and dykes.
resources and 37.5 million tonnes of Inferred

Resources at a grade of 0.0478 per cent thorium,
giving a total of about 35 kt contained thorium.
A significant example is the Nolans Bore rare earth,

phosphate uranium deposit which occurs in veins and
dykes north of Alice Springs in the Northern Territory.
This deposit contains about 81.8 kt of thorium.
Other alkaline complexes with known rare earth

and thorium mineralisation include Brockman in
Western Australia. Exploration reports indicate
thorium occurrences, but no estimates of thorium
resources have been reported.
The Yangibana dykes (termed ironstones), northeast

of Carnarvon in Western Australia, crop out over an
area of 500 km2. Whole rock chemical analyses of a
number of ironstone samples record more than 1000
parts per million of thorium.
In New South Wales, the Toongi intrusive, south of
Dubbo, hosts a 35.7 million tonnes of measured
Data on the thorium content of carbonate mineral

rich intrusions in Australia are sparse. Mount Weld
and Cummins Range deposits in Western Australia
are both known to contain some thorium.
More information: Geoscience Australia 2009.
199
Technology developments future development

of thorium reactors
Demand for thorium resources depends upon the
development and widespread adoption of thoriumfuelled reactors for electricity generation. The main
drivers for interest in thorium-fuelled reactors are:
Some countries, such as India, have much larger
thorium resources than uranium and see thoriumfuelled reactors as a more secure source of energy.
The thorium fuel cycle is considered to be less
conducive to nuclear weapon proliferation than
the uranium fuel cycle.
The thorium fuel cycle generates much less
radioactive waste than the uranium fuel cycle.
Current research and development for use of thorium
in reactors for electricity generation are directed
primarily towards:
Research into thorium fuel designed to be used
in currently operating uranium-fuelled reactors.
Development and construction of a purpose-built
thorium-fuelled reactor for electricity generation.
Development of some other advanced nuclear
reactors which could use thorium fuels.
Further details of the research and developments are
presented in Box 6.4.
200
As there is no established large scale demand and

associated price information for thorium, there is
insufficient information to determine how much

of Australias thorium resources are economically
viable for electricity generation in thorium reactors.
However, as all of Australias thorium resources
occur either in the heavy mineral sand deposits or in
rare earth mineral deposits, mining and processing
cost for the extraction of thorium would be shared
with other commodities.
Infrastructure, environment and other issues

Most thorium resources are contained in heavy
mineral sand deposits and rare earth deposits
that already have essential infrastructure. Some
of these deposits are currently being mined or in
advanced stages of development with infrastructure
costs being borne by commodities being extracted.
Apart from improved resistance to proliferation of
nuclear weapons, a thorium fuel cycle is generally
considered to generate less radioactive waste
and has fewer long-lived transuranic elements.
The extent of these potential advantages over
the current uranium fuel cycle varies according to
different designs of the thorium fuel cycle.
There are little readily available nuclear industry
data on the issues of nuclear proliferation and
volumes and storage of nuclear waste because
there are no currently operating commercial scale
thorium-fuelled reactors.
Box 6.4 R&D thorium projects
Thorium fuel design

At this stage it appears that thorium fuel could be
used in existing uranium-fuelled reactors such as
the latest Canadian CANDU reactors or possibly the
Russian VVER-1000 reactors. This would involve using
thorium fuels designed by Thorium Power Ltd (changed
name to Lightbridge Corporation on 29 September
2009), possibly some time in the period 2015 to
2020 (Thorium Power Ltd 2009).
for use in the current Russian VVER-1000 reactors

(Thorium Power Ltd 2009). The timeframe for this work
is unknown. Two VVER-1000 reactors are currently
being built in India, which has extensive thorium
resources but very limited uranium resources.
Thorium-fuelled reactors
Atomic Energy of Canada Ltd (AECL) is moving towards

certification of an Advanced CANDU Reactor (ACR) 1000
(Generation III+ 1200 MWe) in Canada. The earliest inservice date for an ACR 1000 is 2016. It is anticipated
that use of thorium fuel will be introduced at a later
stage. In mid 2009, AECL signed agreements with three
Chinese entities to develop and demonstrate the use of
thorium fuel in its CANDU reactors at Qinshan in China.
Another agreement in mid 2009 between Areva and
Thorium Power Ltd will assess the use of thorium fuel
in Arevas European Pressurised Reactor (EPR), drawing
upon earlier research.
A purpose built thorium-fuelled reactor the Indian

300 MWe Advanced Heavy Water Reactor (AHWR)
has been proposed for construction as a technical
demonstration. The AHWR will have fuel assemblies
of 30 Th-U233 oxide pins and 24 plutonium-Th oxide
pins around a central rod with burnable absorber. It is
designed to be self-sustaining in relation to U233 bred
from Th232 and have a low plutonium inventory and
consumption. It is designed for a 100 year plant life
and is expected to utilise 65 per cent of the energy
of the fuel, with two thirds of the energy coming
from thorium. The technical demonstration version
is expected to be completed some time after 2017,
but full scale commercial AHWR reactors are not
anticipated before 2030.
Thorium Power Ltd is preparing preliminary licensing

documentation for its thorium fuel assembly design
In 2009 India announced an export version of the

AHWR the AHWR-LEU. This design will use low-
enriched uranium plus thorium as a fuel, dispensing

with the plutonium input. About 39 per cent of the
power will come from thorium (via in situ conversion
to U233). The uranium enrichment level will be 19.75
per cent, giving 4.21 per cent average fissile content
of the U-Th fuel. Plutonium production will be less
than in light water reactors, and the fissile proportion
will be less, providing inherent proliferation
resistance benefits (WNA 2009g; Kakodkar 2009).
India is the only country that has been involved in
development of a full scale thorium reactor, the
AHWR in stage 3. This program had a high priority
while India was under an international trade ban for
nuclear technology and on imports of uranium. The
Nuclear Suppliers Group agreement in September
2008 and the United States-India nuclear agreement
in October 2008 now allow India to trade in nuclear
technology and import uranium fuel. In addition, India
has also signed a nuclear cooperation agreement
with France. It is unclear if India will maintain a high
priority on the development of its thorium fuel cycle.
Advanced reactors
Generation IV reactors will also be capable of using
thorium fuel in the high-temperature gas-cooled
reactors (HTGRs) or the molten salt reactors (MSR).
There are two types of high temperature gas-cooled
reactors (HTGRs): prismatic fuel and pebble bed.
General Atomics is developing a Gas Turbine-Modular
Helium Reactor (GT-MHR) that uses a prismatic
6.4 References
Economics), 2010, Australian Commodities, vol 17, no 1,
March quarter, Canberra, March
ABARE, 2009a, Uranium, Australian Commodities,
vol 16 no 1, March quarter, pp. 158-166, Canberra, March
ABARE, 2009b, Australian Energy Statistics, Canberra,
August
ABARE, 2009c, Australian Mineral Statistics, Canberra,
September
fuel. The GT-MHR core can accommodate a wide

range of fuel options, including HEU/Th, U233/Th
and Plutonium/Th. Pebble bed reactor development
builds on previous work in Germany and is under
development in China and South Africa. A pebble
bed reactor can potentially use thorium in the
fuel pebbles.
The molten salt reactor (MSR) is an advanced
breeder concept, in which the coolant is a molten
salt, usually a fluoride salt mixture. The fuel can be
dissolved enriched uranium, thorium or U233 fluorides.
The fission products dissolve in the salt and are
removed continuously in an online reprocessing loop
and replaced with Th232 or U238. Actinides remain
in the reactor until they fission or are converted to
higher actinides which do so. The MSR was originally
studied in depth in the 1960s, but is now being
revived because of the availability of advanced
technology for the materials and components.
There is renewed interest in the MSR concept in
Japan, the Russian Federation, France and the United
States and the MSR is one of the six Generation IV
designs selected by the international forum of 13
countries for further development.
As with a purpose built thorium-fuelled reactor, these
advanced HTGR and MSR reactors are not likely to
come on stream much before 2030, and the extent
to which they will use thorium rather than uranium is
also uncertain.
Australian Uranium Association, 2008, Outlook for
the Uranium Industry Evaluating the economic impact
of the Australian uranium industry to 2030, Sydney,
<http://www.aua.org.au>
Commonwealth of Australia, 2006a, Uranium Mining,
Processing and Nuclear Energy Opportunities for
Australia?, Report to the Prime Minister by the Uranium
Mining, Processing and Nuclear Energy Review Taskforce,
December 2006
ABARE, 2009d, Minerals and energy, major development

Commonwealth of Australia, 2006b, Uranium Industry

Framework, Canberra, <http://www.ret.gov.au/resources/
mining/australian_mineral_commodities/uranium/Pages/
Uranium.aspx>
ABARE, 2009e, Australian Commodity Statistics 2009,

Canberra, December
Commonwealth of Australia, 2006c, Australias uranium

Greenhouse friendly fuel for an energy hungry world, Canberra
ABARE, 2006, Uranium, Global Market Developments and

Prospects for Australian Exports, Canberra
EIA (Energy Information Administration), 2009a,

International Energy Outlook 2009, <http://www.eia.doe.
gov/oiaf/ieo/index.html>
ABS (Australian Bureau of Statistics), 2009a, Mineral and

Petroleum Exploration, June quarter 2009, Cat. No 8412.0,
Canberra, <http://www.abs.gov.au>
ABS, 2009b, International trade, Cat. No. 5465.0, Canberra
ANSTO (Australian Nuclear Science and Technology
Organisation), 2006, Introducing Nuclear Power to Australia: an
economic comparison, Canberra, <http://www.ansto.gov.au>
ASNO (Australian Safeguards and Non-proliferation
Office), 2009, Annual report 200809, Canberra,
<http://www.asno.dfat.gov.au/annual_reports.html>
EIA, 2009b, Nuclear Power: 12 percent of Americas

Generating Capacity, 20 percent of the Electricity,
<http://www.eia.doe.gov/cneaf/nuclear/page/analysis/
nuclearpower.html>
Euratom Supply Agency, 2009, Annual Report 2008,
Eurpoean Commission, Luxembourg, <http://ec.europa.eu/
euratom>
Geoscience Australia, 2009, Australias Identified Mineral
Resources, 2009, Geoscience Australia, Canberra,
201
<http://www.australianminesatlas.gov.au/aimr/index.jsp>
Geoscience Australia, 2007, Onshore Energy Security
Program 5 Year Plan, <http://www.ga.gov.au/image_cache/
GA10075.pdf>
IAEA (International Atomic Energy Agency), 2009, Power
Reactor Information System (PRIS), <http://www.iaea.org/
programmes/a2/>
IEA (International Energy Agency) 2009, World Energy
Balances, OECD, Paris, <http://www.iea.org>
Kakodkar A, 2009, Statement by Dr Anil Kakodkar,
Chairman of the Atomic Energy Commission and leader of
the Indian delegation, IAEA 53rd General Conference,
Vienna, 16 September 2009
Ux Consulting 2009, Historical Ux Price Data, <http://www.

uxc.com/c/prices/uxc_prices-mth-historic.xls>
Ux Consulting, Uranium Market Outlook, Quarterly report,
UxC, Roswell, Ga, <http://www.uxc.com>
WNA (World Nuclear Association), 2009a, The Nuclear Fuel
Cycle, January 2009, <http://www.world-nuclear.org/info/
inf03.html>
WNA, 2009b, World uranium mining, July 2009,
<http://www.world-nuclear.org/info/default.aspx?id=430&te
rms=uranium+production>
Lambert I, Jaireth S, McKay A, and Miezitis Y, 2005, Why

Australia has so much uranium, AusGeo News, Issue 80,
December 2005
WNA, 2009c, World Nuclear Power Reactors 200709 &

Uranium Requirements, December 2008, <http://www.
world-nuclear.org/info/reactors-dec2008.html>
Metals Economics Group, 2009, Corporate Exploration

Strategies study, <http://www.metalseconomics.com/
default.htm>
WNA, 2009d, The Global Nuclear End Market Supply and

Demand 20092030
OECD/NEA (Nuclear Energy Agency) and IAEA (International

Atomic Energy Agency), 2008, Uranium 2007: Resources,
Production and Demand, OECD/NEA-IAEA, Paris, <http://
www.nea.fr/index.html>
OECD/NEA and IAEA, 2006, Forty Years of Uranium
Resources, Production and Demand in Perspective,
The Red Book Retrospective, OECD/NEA-IAEA, Paris
Schodde R, and Trench A, 2009, Benchmarking uranium
projects; How do the next generation of mines compare
to current operations?, AusIMM International Uranium
Conference, June 2009, Darwin, Northern Territory
202
TORO Energy Limited, 2008, Presentation to investors and

shareholders, 16 October 2008, <http://www.toroenergy.
com.au/presentations.html>
Skirrow RG, Jaireth S, Huston DL, Bastrakov EN, Schofield

A, van der Wielen SE, Barnicoat AC, 2009, Uranium mineral
systems: Processes, exploration criteria and a new deposit
framework, Geoscience Australia, Record 2009/20
Thorium Power Limited, 2009, Annual shareholders meeting,
29 June 2009, <http://ir.thoriumpower.com/phoenix.
zhtml?c=121550&p=irol-irhome>
WNA, 2009e, Processing of used nuclear fuel, September

2009, <http://www.world-nuclear.org/info/inf69.html>
WNA, 2009f, World nuclear power reactors and uranium
requirements, October 2009, <http://www.world-nuclear.
org/info/reactors.html>
WNA, 2009g, Generation IV nuclear reactors, August 2009,
<http://www.world-nuclear.org/info/default.aspx?id=530&te
rms=Generation+IV>
WNA, 2009h, Advanced Nuclear Power Reactors, September
2009, <http://www.world-nuclear.org/info/default.aspx?id=
528&terms=advanced+nuclear+reactors>
WNA, 2009i, Thorium, November 2009, <http://www.worldnuclear.org/info/inf62.html>
WNA, 2008, WNA Market Report, London, <http://www.
world-nuclear.org/reference/publications.html>
WNA, 2005, The New Economics of Nuclear Power, WNA,
London, <http://www.world-nuclear.org/reference/pdf/
economics.pdf>
Chapter 7
Geothermal Energy
7.1 Summary
K e y m e s s a ge s

Geothermal energy is a major resource and potential source of low emissions renewable energy
suitable for base-load electricity generation and direct-use applications.
Australia has significant potential geothermal resources associated with buried high heat-producing
granites and lower temperature geothermal resources associated with naturally-circulating waters in
aquifers deep in sedimentary basins.
Most current geothermal projects in Australia are still at proof-of-concept or early commercial
demonstration stage.
Demonstration of the commercial viability of geothermal energy in Australia will assist in attracting
the capital investment required for geothermal energy development. The development of some
remote geothermal resources will require additional transmission infrastructure.
Geothermal energy is projected to produce around 6 TWh in 202930. Electricity supply is likely
to be from demonstration plants initially but commercial-scale geothermal energy production is
expected by 2030.
7.1.1 World geothermal resources

and market
Electricity has been produced commercially
from geothermal resources for over 100 years.
Conventional geothermal resources are based
on hydrothermal systems associated with active
volcanism, which Australia lacks.
Significant geothermal resources can also be
associated with basement rocks heated by natural
radioactive decay of elements (such as uranium,
thorium and potassium) and in naturally-circulating
waters deep in sedimentary basins.

World geothermal energy is currently used

for electricity generation and heat production
(91 per cent) and in direct-use applications
(9 per cent), but accounted for only 0.4 per cent
of total primary energy consumption in 2007.
Geothermal energy has the potential to

sustainably provide large amounts of lowemission base-load electricity generation, and
can also be used to power industrial processes
via direct-use applications (including desalination
distillation, district heating and cooling), and for
ground source heat pumps.
Government policies, energy prices and falling
investment costs and risks are projected to be
the main factors underpinning future growth in
world geothermal energy use.
World electricity generation from geothermal

energy is projected by the IEA in its reference
case to increase at an average annual rate
of 4.6 per cent between 2007 and 2030 to
reach 173TWh or around 0.5 per cent of total
electricity generation. Most of this increase is
projected to come from projects in the United
States and non-OECD Asia.
7.1.2 Australias geothermal resources

Australia has considerable Hot Rock geothermal
energy potential. This results from the
widespread occurrence of basement rocks
(granites in particular) in which heat is generated
by natural radioactive decay. Where high heatproducing rocks occur beneath thick blankets
of thermally insulating strata, the thermal
energy is retained in the basement rocks and
overlying strata causing elevated temperatures
at relatively shallow depths. There are extensive
areas where temperatures are estimated to
reach at least 200C at around 5 km depth
(figure 7.1).
There is also potential for lower temperature
geothermal resources associated with naturallycirculating waters in aquifers deep in a number
of sedimentary basins (Hot Sedimentary Aquifer
geothermal). These are potentially suitable for
electricity generation and direct use.
203
120
130
140
150
10
DARWIN
750 km
20
BRISBANE
30
PERTH
SYDNEY
ADELAIDE
MELBOURNE
HOBART
204
Drill hole location
40
NOTE: Shading shows areas with > 3 km of

sediment and/or hotter than 200 oC at 5 km
AERA 7.1
Data from Earth Energy Pty Ltd
Figure 7.1 Predicted temperature at 5 km depth based mostly on bottom-hole temperature measurements in more
than 5000 petroleum and water boreholes
Source: Data from Earth Energy Pty Ltd; AUSTHERM database; Geoscience Australia
A geothermal power plant has been in operation

at Birdsville, Queensland, periodically since 1992.
It uses a bore that taps water from the Great
Artesian Basin at 98C at surface to produce
approximately 80 kW net, supplying about 30 per
cent of the total plant output with the remainder
being fuelled by diesel and LPG.
Australias overall geothermal potential has only
recently been appreciated. Consequently, there
are significant gaps in the information required
to adequately assess potential. It is likely that
additional new data will lead to increases in the
geothermal resource base.
As of July 2009 eight companies have declared
identified geothermal resources totalling
2.6 million PJ of heat in place.

geothermal resources
Government policies relating to geothermal
energy research, development and demonstration
(RD&D) are critical to the outlook for electricity

generation from geothermal energy. The
Australian Governments Renewable Energy
Demonstration Program and Geothermal Drilling
Program are key contributors.
The demonstration of the economic viability of
the extraction and use of geothermal energy both
for electricity generation and direct use is critical
to attract the capital investment required.
Improved information on geothermal energy
potential in many parts of Australia especially
new geoscientific data designed to locate
regions with temperature anomalies at relatively
shallow depths (1-4 km) would aid definition of
geothermal resources and reduce exploration
costs.
There is significant potential for energy savings
through greater use of ground source heat
pumps in heating and cooling buildings in many
regions of Australia.
C H A P T E R 7 : G E O TH E R MAL ENER GY
7.1.4 Australias geothermal

energy market
There are uncertainties in the outlook for
geothermal power over the next two decades.
A major uncertainty is the cost of electricity
production as the technology has yet to be proven
commercially viable. Present estimates show a
wide range in the cost of geothermal electricity
generation, reflecting the current pre-commercial
stage of the industry, as the cost of electricity
generation is highly dependent on future technology
developments and grid connection issues.
The geothermal industry in Australia is
progressing, with proof-of-concept having been
attained in one project and expected to be
achieved in at least two others within one to two
years. Several pilot projects are expected to be
completed within five years.
Progress is being assisted by government
grants to developing geothermal projects. Two
geothermal projects were awarded grants in
November 2009 totalling $153 million under
the Australian Governments Renewable
Energy Demonstration Program; the Australian
Government Geothermal Drilling Program has
announced $49 million in grants to support
seven proof-of-concept projects; and the Victorian
Government has announced $25 million to
support a demonstration project.
In ABAREs latest long-term energy projections,
which include the Renewable Energy Target,
a 5 per cent emissions reduction target and
other government policies, geothermal electricity
generation in Australia is projected to increase
by 18.4 per cent per year, to reach around
6 TWh in 202930 and account for around
1.5 per cent of total electricity generation.

and world market
7.2.1 Definitions
Geothermal energy is heat (thermal) derived from
the Earth (geo). Geothermal energy is an abundant,
clean (effectively no greenhouse gas emissions) and
reliable (renewable or sustainable) natural resource.
There is a steady flow of heat from the centre of
the Earth (where temperatures are above 5000C)
through the surface of the Earth (-30 to +40C) into
space (-273C): heat flows from hot to cold. The
heat is generated by the natural decay over billions
of years of radiogenic elements including uranium,
thorium and potassium.
Geothermal resources that have been utilised, or
are prospective for development, range from shallow
ground to hot water and rock several kilometres
below the Earths surface (Energy and Geoscience
Institute 2001).
Natural fissure
Well
Hot Rock heat

extraction system
Impermeable
sediments
Hot Rock
System
Permeable sediments
Impermeable
sediments
Hydraulic fracture
system
High heat producing granite or young magmatism (<5000 yr)
AERA 7.2
Figure 7.2 Hot Rock and Hot Sedimentary Aquifer systems

Source: Ayling et al. 2007a
It is useful to distinguish between hydrothermal and

other geothermal resources:
Hydrothermal resources use naturally occurring
hot water or steam circulating through permeable
rock these conventional geothermal systems are
usually based on hydrothermal aquifers commonly
associated with active or young volcanic systems.
Hydrothermal resources have been used in a range
of applications (discussed further later). Australia
lacks hydrothermal resources as it has no active
volcanism on the mainland.
Hot Rock and Hot Sedimentary Aquifer
geothermal resources are of particular interest
to Australia (figure 7.2). Research over the past
30 years has demonstrated that non-volcanic
areas may have potential for Hot Rock resources
(also known as enhanced geothermal systems);
that produce super-heated water or steam by
artificially circulating fluid through the rock. Hot
Sedimentary Aquifers are found in areas where
high temperatures are reached at depths shallow
enough for natural porosity and permeability
in sedimentary rocks to be preserved so that
fluid circulation can occur without artificial
enhancement. It is now evident that Australia has
good Hot Rock geothermal energy potential, as
well as a significant potential for Hot Sedimentary
Aquifer resources. Geothermal systems that are
similar to Australias Hot Sedimentary Aquifer
systems have been used elsewhere in the
world for electricity generation and direct-use
applications for over 20 years.
There are three basic requirements for a geothermal
resource:
1. a persistent heat source (or sink);
2. a heat transfer and transport medium (usually
water and/or steam); and
3. sufficient permeability/transportability within the
buried geothermal reservoir for the fluid to be
able to pass through and gain (or lose) heat.
205
To some degree, the natural conditions can be

modified. There is a large range of heat conversion
technologies available, so that geothermal resources
of almost any temperature can be utilised. If
insufficient volumes of water exist naturally, this can
be added. Permeability can be artificially enhanced,
or pipes can be used in shallow systems.
Geothermal resources (excluding ground source
heat pumps) may be classified broadly according
to temperature high temperature (greater than
170C), moderate temperature (90C to 170C)
and low temperature (less than 90C) which
influences the uses to which they may be applied
(Geothermal Resources Council 2009). High
temperature systems are often exploited for electricity
generation, while low temperature systems are more
suited to direct-use applications (figure 7.3). High
and moderate temperature systems may be used
for both electricity generation and direct-use
applications in a cascading fashion.
Electricity generation hydrothermal systems are

currently utilised in several countries for electricity
generation. Geothermal power plants can provide
base-load capacity 24 hours a day and have very
high long-term capacity and availability factors.
Current technologies (Box 7.1) include dry steam
plants (uses steam at greater than 235C through
production wells), flash steam plants (use hot water
at temperatures in the range 150C to 300C) and
binary-cycle plants (used for moderate temperature
geothermal reservoirs between 100C and 180C).
Temperature is only one parameter used to determine
which conversion technology is utilised for any
geothermal reserve. Electricity generation from
geothermal water was pioneered at Larderello, Italy
in 1904, and this steam field has been in continuous
production since that time. The Wairakei geothermal
power plant, located in New Zealand, built in 1958
the second geothermal power station built in the
world and the first to use hot pressurised water has
Direct use applications for geothermal resources
190
180
Digestion in paper pulp (Kraft); Evaporation of highly concentrated

solutions; Refrigeration by ammonia absorption
170 Heavy water via hydrogen sulphide process; Drying of diatomaceous earth
T range of binary fluid power
Saturated steam
160 Drying of fish meal and timber

150 Alumina via Bayers process
140 Drying farm products; Food canning
130
Evaporation in sugar refining; Extraction of salts by evaporation and

crystallisation; Fresh water by distillation
120 Concentration of saline solution; Refrigeration (medium temperature)

110 Drying and curing of light aggregate cement slabs
Hot water
206
T range of steam power
Temperature (C)
100
Drying of organic materials eg: seaweed, grass, vegetables etc;

Washing and drying of wool
90
Drying of stock fish; Intense de-icing operations
80
Space heating (buildings and greenhouses)
70
Refrigeration (lower temperature limit)
60
Animal husbandry; Greenhouses by combined space and hotbed heating
50
Mushroom growing; Balneology/theraputic hot springs
40
Soil warming; Swimming pools; Biodegredation; Fermentations
30
Warm water for year round mining in cold climates; De-icing; Fish farming
AERA 7.3
Figure 7.3 Direct-use applications of geothermal energy

Source: Geoscience Australia modified after Lindal 1973; Ayling et al. 2007b
generated electricity for more than 50 years. The

largest geothermal development in the world at The
Geysers in California, United States, has an output
capacity of 750 MW based on 22 separate power
plants, some of which have been in operation for
nearly 50 years.
Direct-heat uses for geothermal waters hot water
may be piped directly into facilities for use in a range
of applications such as district (and large commercial
buildings) heating and greenhouses, heating water for
fish farming (aquaculture), drying crops and building
materials, and for use in resorts and spas (figure
7.3). The heat may be used directly in industrial
processes including drying, for absorption chillers
(including airconditioning), and in desalination of
sea water by distillation. People have traditionally
used hot water from geothermal springs for bathing,
cooking and heating; for example, the Romans used
geothermal waters at Bath in England.
Ground source heat pumps (GSHP) that utilise the
ground as a heat source/sink these systems are a
direct-use technology that use the ground as a heat
source or sink rather than natural hot water (i.e.

they do not use geothermal resources) and are
used to heat and cool buildings. Heat is extracted
from the ground and delivered to the building in
winter (heating mode) and heat is removed from the
building and delivered for storage into the ground
in summer (cooling mode). The GSHP is electric
powered to circulate heat-carrying fluid, but energy
consumption is significantly reduced compared with
conventional heating and cooling systems.
7.2.2 Geothermal energy supply chain

Figure 7.5 is a schematic representation of the
potential geothermal energy market in Australia.
At present geothermal energy resources are used
only in limited local-scale applications in Australia.
High and moderate temperature geothermal energy
resources (Hot Rock and Hot Sedimentary Aquifer)
may be utilised to produce base-load electricity
for distribution through the transmission grid. In
addition, lower temperature geothermal energy
resources, particularly those found in shallow
sedimentary aquifers, could be used for direct-use
applications. Ground source heat pumps could be
Box 7.1 Geothermal energy technologies for Electricity generation

Current geothermal technologies for electricity
generation are:
Flash steam plants are used where abundant
high temperature water or vapour is available.
Hot water is removed from the production well
and sprayed into a separator (tank) held at a
much lower pressure, causing some of the water
to flash to steam (vaporise). The steam is used
to drive the turbine and then condensed back to
water and injected back into the reservoir.
Dry steam plants use steam resources at
temperatures of about 250C. The steam goes
directly to a turbine, which drives a generator
that produces electricity. This was originally used
in Larderello, Italy, and is the technology used
at the worlds largest geothermal power field,
at The Geysers in California, United States.
Binary power plants (figure 7.4) use a
heat exchanger to transfer energy from the
geothermally-heated fluid to a secondary fluid
(working fluid, e.g. iso-pentane or ammoniawater mix) that has a lower boiling point and
higher vapour pressure than steam at the same
temperature. The working fluid is vaporised
as it passes through the heat exchanger, and
then expanded through a turbine to generate
electricity. It is then cooled and condensed to
begin the cycle again. The cooled geothermal fluid
is also recirculated into the ground: the system
comprises two closed loops.
Australias geothermal systems are neither hot

enough nor under sufficient pressure to sustainably
produce large amounts of steam. Most Australian
geothermal resources will be exploited using
binary power generation systems, even those with
temperatures of over 200C.
Electricity generation costs are strongly influenced
by the temperature and flow rate of the geothermal
fluid produced, which dictates the size of the turbine,
heat exchangers and cooling system. Access to the
electricity grid is also an important cost consideration
for electricity generation projects.
Turbine
Generator
Electricity
Heat Exchanger
Production
Well
Geothermal Reservoir
Injection
Well
Figure 7.4 Design of a binary cycle power plant
AERA 7.4
207
employed almost anywhere and on a range of scales

to provide building heating and cooling.
Key stages in the geothermal energy supply chain are
discussed further in Box 7.2.
Important elements of Hot Rock (and, to a lesser
extent, Hot Sedimentary Aquifer) geothermal energy
developments are the definition of the geothermal
resource by deep drilling and establishing a
geothermal reservoir in the geothermally-heated
rocks. The artificial creation of geothermal reservoirs
in the hot rocks for water to flow through is commonly
7.2.3 World geothermal energy market

The world has vast, largely unutilised geothermal
energy resources. Geothermal energy currently
accounts for only a small share of world primary
Storage
Development and
Production
called engineered or enhanced geothermal

systems (EGS) and involves fracturing the hot rock
in a process known as hydrofracturing. Once the
reservoir in the hot rock is created and the flow of
water established in a closed loop, the geothermal
resource can be used to generate electricity using the
technologies described in Box 7.1 and the electricity
connected to the transmission grid for distribution.
Development
decision
End Use Market
Direct use
applications
Industry
Electricity
Generation
Project
208
Domestic Market
(proposed)
Resource
potential
Commercial
Residential
Ground
source
heat
pumps
AERA 7.5
Figure 7.5 Australias geothermal energy supply chain

Industry
1%
OECD North
America
Residential
5%
Commercial
2%
Other
1%
Asia
OECD Europe
OECD Asia Pacific

Rest of
the world
AERA 7.6
100
200
300
400
500
600
700
Electricity and
heat generation
91%
PJ
Geothermal energy inputs to electricity generation
Other consumption of geothermal energy
AERA 7.7
Figure 7.6 Primary consumption of geothermal energy,

by region and use, 2007
Figure 7.7 World geothermal energy consumption,

by sector, 2007
Source: IEA 2009a
Source: IEA 2009a
energy consumption. Geothermal resources are

mainly utilised for electricity generation, although
direct-use applications are also significant. Globally,
geothermal energy use is projected to more than
double over the outlook period to 2030 (IEA 2009b).
Many countries have identified lower temperature

geothermal resources and these are increasingly
used for district heating and ground source heat
pump systems (WEC 2007).
Resources
Geothermal energy consumption is equal to

geothermal energy production as geothermal
energy is not traded in its primary form. Most
geothermal plants are built close to the resource
because it is generally not efficient to transport
high temperature steam or water over distances
of more than 10 km by pipeline due to heat
losses (or 60 km in thermally insulated pipelines;
IGA 2004).
Until recently, geothermal energy was considered

to have significant economic potential only in areas
with hydrothermal systems; that is, in countries
with active volcanoes. Countries that have identified
and are utilising significant amounts of these
hydrothermal energy resources include the United
States, the Philippines, Indonesia, Mexico, Italy,
Iceland, New Zealand and Japan.
Consumption
Table 7.1 Key statistics for the geothermal energy market

unit
Australia
2006b
OECD
2008
World
2007
Primary energy consumptiona
PJ
1316
2053
Share of total
0.6
0.4
Average annual growth, since 2000
0.4
0.6
TWh
0.0007
40.0
61.8
0.4
0.3
2.4
2.5
0.08
5364
10 300c
Electricity output
Share of total
Electricity capacity
%
GW
a Energy production and primary energy consumption are identical. b Goldstein et al. 2008. c World data are 2008 Australian Geothermal Energy
Group unpublished data
Source: IEA 2009a
Box 7.2 Stages in development of geothermal energy

Resources and exploration usually involves
site assessment, leasing and land acquisition,
exploratory drilling, and well testing. Notably,
exploratory drilling and reservoir assessment, as
in oil and gas fields, are high-risk activities and
an entire project may be cancelled if an adequate
resource is not found (IEA 2003). Improvement
in Hot Rock geothermal resource exploration and
assessment will reduce costs.
Development and production following
successful exploration activity, a company will
seek to confirm the energy potential of the
resource. The costs associated with drilling and
well testing play a major role in determining the
economic feasibility of producing energy from
geothermal resources. Hot Rock geothermal
resources require the creation of a geothermal
reservoir by hydrofracturing. Depending on the
orientation of stresses in the earth, fractures
can be horizontal, vertical, or at an angle. A
horizontal fracture network is considered optimal,
as it reduces water loss to the surrounding rock
and increases the efficiency of the system. The
hydrofracturing process can last for several weeks
depending on the degree of fracturing required.
Hydrofracturing can induce local seismic activity
but the risks associated with this are considered

to be very low. Hot Sedimentary Aquifer
geothermal resources generally have sufficient
naturally-occurring water and permeability that
most systems do not need to be enhanced
including by hydrofracturing.
Processing and distribution to end use
applications once the amount of recoverable
heat from the reservoir has been estimated, it
needs to be converted to usable energy, either
by generating electricity or by direct use of the
heat energy in (industrial) processes. Activities
that bring a power plant on line include: drilling,
project permitting, liquid and steam gathering
system, and power plant design and construction
(Kagel 2006). Information on geothermal
electricity generation technologies is provided in
Box 7.1. The type of geothermal resource and its
location are important from a commercialisation
viewpoint. Access to the electricity grid (whether
short or long distance) is important for electricity
generation. Location adjacent to infrastructure is
important for retro-fitting or development of new
direct-use applications.
209
In 2007, geothermal energy accounted for around

0.4 per cent of world primary energy consumption
(table 7.1). World geothermal energy consumption
has increased slowly in recent years, at an average
rate of 0.6 per cent per year between 2000 and
2007. In the OECD region, geothermal energy
accounts for a relatively small share of total primary
energy consumption (0.6 per cent in 2008) and
growth in recent years has also been very slow (0.4
per cent per year between 2000 and 2008).
the residential sector and 2 per cent in the commercial

sector (IEA 2009a). Most direct-use applications
of geothermal energy occur in the OECD Europe,
North America and Asia Pacific regions (figure 7.6).
The utilisation of geothermal energy for electricity
generation has increased markedly since the 1970s
(figure 7.8). World geothermal electricity generation
increased from 4.5 TWh in 1971 to 61.8 TWh in
2007, which represents an average annual growth
rate of 7.5 per cent. In recent years, however, this
growth rate has been much slower, at 2.5 per cent
per year between 2000 and 2007. Geothermal
energy accounted for 0.3 per cent of world electricity
generation in 2007 (IEA 2009a).
Geothermal resources are mainly utilised in the

energy markets of OECD North America (31 per cent
of world geothermal energy consumption in 2007),
Asia (30 per cent), OECD Europe (21 per cent) and
the OECD Asia Pacific (10 per cent) (figure 7.6). The
main geothermal energy consumers are the United
States, the Philippines, Mexico, Indonesia, Italy,
Iceland, New Zealand and Japan (IEA 2009a).
Figure 7.7 provides information on the world
use of geothermal energy as a fuel input to the
transformation (or conversion) sector and a fuel
input to other industries in direct-use applications,
all measured in PJ. In 2007, 91 per cent of world
geothermal energy consumption was used as a fuel
input to the transformation sector (of which electricity
plants accounted for 97.5 per cent, combined heat and
power plants for 2.2 per cent, and heat plants for 0.3
per cent). The remaining 9 per cent was used in directuse applications (for district heating, agriculture and
greenhouses) including, most importantly, 5 per cent in
70
0.4
60
0.3
50
0.2
40
TWh
210
Electricity generation from geothermal energy has a

low heat-to-electricity conversion efficiency compared
with many other sources of electricity generation.
For example, in 2007, geothermal inputs of 1884PJ
to electricity generation yielded 61.8 TWh (223PJ),
showing a 12 per cent aggregate conversion
efficiency. Regional conversion efficiencies in 2007
ranged from 11.8 per cent to 14.7 per cent for those
regions that provided data the IEA assumes a
10 per cent conversion efficiency for countries that
do not supply data. Technological advances in the
geothermal energy industry have resulted in efficiency
gains which has increased the conversion ratio
and decreased the fuel inputs required for a unit
of electricity generation.
30
20
0.1
10
0
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
PJ
Rest of the world
Asia
OECD North America
OECD Asia Pacific
OECD Europe
Geothermal share of
electricity generation (%)
Figure 7.8 World geothermal electricity generation, by region

Source: IEA 2009a
AERA 7.8
In 2007, 17 countries were generating electricity from

geothermal energy (IEA 2009a). The United States
was the largest geothermal electricity generator, with
output of 17 TWh. Other major producers include the
Philippines, Mexico, Indonesia, Italy, Iceland, New
Zealand and Japan (figure 7.9a).
Geothermal electricity generation represents a
significant share of the total electricity requirements
in some countries. In 2007, the three countries
most dependent on geothermal energy for electricity
generation were Iceland (30 per cent of total
electricity generation), El Salvador (24 per cent)
and the Philippines (17 per cent) (figure 7.9b).
Direct-use applications
The largest direct applications of geothermal energy
are in ground source heat pumps and industrial
applications and space heating: together these
accounted for more than 80 per cent of direct-use
applications in 2004 (WEC 2007). In 2007, the
United States was the largest consumer of direct
geothermal energy (43 PJ), followed by Turkey,
Iceland and New Zealand (figure 7.10). Ground
source heat pumps are mainly used in areas with

noticeable seasonal temperature fluctuations such
as North America and Europe.
World market outlook to 2030

IEA reference case projections for primary
consumption of geothermal energy are not
available; therefore, the outlook for the world
geothermal energy market will focus on electricity
generation. However, the increased global demand
for renewable energy is expected to increase
demand for geothermal energy both for electricity
generation and for direct use. The strong growth
in use of ground source heat pumps established
over the past decade is expected to continue,
supported by increased demand for renewable
energy and increasing cost-effectiveness of directuse geothermal energy. Improvements in drilling
technologies, improved reservoir management,
and reduced operating and maintenance costs,
coupled with further exploration, are likely to
promote increased utilisation of geothermal
resources, and hydrothermal resources in
particular.
a) Electricity generation
United States
United States
Philippines
Turkey
Mexico
Iceland
Indonesia
New Zealand
Italy
Italy
Iceland
Japan
New Zealand
Germany
Japan
Switzerland
El Salvador
France
Costa Rica
Hungary
0
10
15
211
AERA 7.10
20
10
20
30
40
50
PJ
TWh
Figure 7.10 World direct use of geothermal energy,

b) Share of total electricity generation
Source: IEA 2009a
United States
Philippines
Table 7.2 IEA reference case projections for world

geothermal electricity generation
Mexico
Indonesia
unit
Italy
OECD
Iceland
New Zealand
Japan
El Salvador
AERA 7.9
10
20
30
40
TWh
40
92
0.4
0.7
3.7
Share of total
Source: IEA 2009a
TWh
22
81
0.2
0.4
5.8
TWh
62
173
Share of total
0.3
0.5
4.6
World
Figure 7.9 World geothermal electricity generation,

2030
Share of total
Non-OECD
Costa Rica
2007
Source: IEA 2009b
Geothermal electricity generation is projected

to double its share of total electricity generation
by 2030 to reach 0.5 per cent. World electricity
generation from geothermal energy is projected to
nearly triple to 173 TWh by 2030, growing at an
average rate of nearly 5 per cent per year (table
7.2). Most of the growth in geothermal electricity
generation is expected to come from the United
States and non-OECD Asia (IEA 2009b).
7.3 Australias geothermal

7.3.1 Geothermal resources
As there are no active volcanoes on the Australian
continent (there are active volcanoes on Heard and
McDonald Islands), Australia lacks conventional
hydrothermal resources. However, Australia
has substantial potential for Hot Rock and Hot
Sedimentary Aquifer resources.
The factors which combine to give Australia an
excellent Hot Rock geothermal potential are:
212
Widespread occurrence of basement rocks,

especially granites, with unusually high heat
generating capacities because of abundances
of the radioactive elements uranium, thorium
and potassium which over hundreds of millions
of years, decay and produce heat. In particular,
granites of Proterozoic age which occur throughout
northern and central Australia are generally
high heat producing because of unusually high
abundances of uranium, potassium and thorium,
but some occurrences of older Archean and
younger Paleozoic granites are also high heatproducing (Budd 2007). Where these high heatproducing granites are buried beneath thick
blankets of thermally insulating sediments or
metamorphic rocks, the heat energy is retained in
the basement rocks and overlying strata.
The Australian plate is moving northwards and
colliding with the Pacific plate, resulting in a
general horizontal stress orientation in the
Australian crust, which is favourable for the
development during hydrofracturing of subhorizontal fracture networks that can connect
adjacent wells at a similar depth (box 7.2;
Hillis and Reynolds 2000). Geodynamics Ltd
(2009) estimate that they are able to create an
underground heat exchanger at Habanero (in the
Cooper Basin of far north-east South Australia)
four times larger than has previously been
attained elsewhere in the world.
There is also potential for Hot Sedimentary Aquifer
geothermal resources in a number of sedimentary
basins where circulating groundwater systems may
allow a high flow rate of high, moderate and low
temperature water. Although commonly at a lower
temperature, the high flow rate allows significant

energy delivery to the surface. Water temperatures,
permeability and the depth at which useful
geothermal waters can be tapped will be dependent
on a number of factors, particularly the nature of the
basement rocks underlying the basin and the local
hydrology of the basin.
Australias geothermal potential has only recently
been appreciated (box 7.3). As a consequence,
there is incomplete knowledge of where geothermal
potential exists. It is likely that further data
acquisition will lead to increases in the geothermal
resource base as already geothermal resources have
been identified by company exploration programs in
areas outside of those predicted to have geothermal
potential in national-scale compilations.
Current knowledge is based on a database of
temperatures recorded at the bottom of more than
5700 deep drill holes, most of which were drilled for
petroleum exploration (figure 7.11) supported by more
detailed local investigations by companies (box 7.3).
National-scale maps published by Geoscience Australia
showing the distribution of high heat-producing
granites and sedimentary basins, together with other
information such as basin depth, provide a national
framework and basis for identifying areas likely to have
the greatest hot rock potential (Budd 2007).
In addition to the national database, maps and
assessments of a number of regional and local
assessments have been undertaken. For example,
an assessment of the geothermal potential of Victoria
(SKM 2005) concluded that while the temperatures
of geothermal water found within the top 2000 m of
the surface of the state were not sufficiently high for
generating electricity, there was abundant and readily
accessible geothermal water suitable for direct
heating purposes.
The Australian Code for Reporting of Exploration
Results, Geothermal Resources and Geothermal
Reserves (2008) has been developed to provide
a common framework for categorising geothermal
resources and reserves for the information of
potential investors (available at www.agea.org.au).
The various categories of the Code describe the
development process, which broadly consists of
reducing geological uncertainty and completing
technical (e.g. energy conversion), economic and
regulatory requirements.
Table 7.3 Australias reported geothermal resources
as at July 2009a
PJ
Identified geothermal resources
(sub-economic)
2 572 280
a Includes measured, indicated and inferred resources. Australian

Code for Reporting of Exploration Results, Geothermal Resources
and Geothermal Reserves. www.agea.org.au
120
130
140
150
10
DARWIN
750 km
20
D
C
PERTH
6
A
BRISBANE
B
G
30
F
ADELAIDE
2 3
SYDNEY
MELBOURNE
HOBART
40
213
Geothermal exploration license(s)

Drill hole location
AERA 7.11
Data from Earth Energy Pty Ltd

Figure
7.11 Predicted temperature at 5 km depth based mostly on bottom-hole temperature measurements in more
than 5000 petroleum and water boreholes. Areas of current exploration discussed in the chapter are shown as
overlaid letters (box 7.4) and numbers (box 7.5)
Note: Inset map shows the distribution of data points used to construct the map and the paucity of data points over most of the continent
Source: Data from Earth Energy Pty Ltd; AUSTHERM database; Geoscience Australia
Eight companies have declared identified geothermal

resources in 28 leases across four States totalling
2.6 millionPJ of heat in place (table 7.3).
Other than at Birdsville, Australias reported
geothermal resources are currently all subeconomic because the commercial viability of
utilising geothermal energy for large-scale electricity
generation connected to the National Electricity
Market has not yet been demonstrated in Australia.
Australias geothermal industry is still in the RD&D
phase of the technology innovation process. It is not
expected that any technological breakthroughs are
needed. Rather there is a need for progression of
projects through all stages from resource definition
to production and marketing. Project economics is
the main factor that has potential to impede the
development of the industry.
Compilations of predicted temperature at 5 km depth
(figure 7.11) suggest that there are substantial
areas of the continent where temperatures exceed

200C at this depth, which is considered feasible
for geothermal energy exploitation. This implies
that Australia has world class potential for Hot Rock
geothermal power.
A simple calculation suggests that if just 1 per cent
of Australias geothermal energy with a minimum
temperature of 150C and at a maximum depth of
5km were accessible, the total resource is of the
order of 190 million PJ, which is roughly 25000
times Australias primary energy use (Budd et al.
2008). This calculation ignores the renewable
nature of the resource, that it can be utilised
at temperatures of less than 150C, and that
improvements in drilling technology will mean that
depths of greater than 5 km will be accessible.
The distribution of data points in the small inset
map shows that there are extensive areas of the
continent with little or no data. New geological data
Box 7.3 Geothermal exploration activity and data issues in Australia

It has only been in the last decade that it has
become evident that Australia has considerable
geothermal potential. This is because of a perception
that geothermal resources are found only in regions
of active volcanism, which excludes Australia. The
Hot Dry Rock concept originated at Fenton Hill, New
Mexico, from the work by the Los Alamos Scientific
Laboratories in the early 1970s. The concept was to
replicate conventional geothermal systems in dry,
un-fractured rock by creating the required permeability
and introducing the required fluid.
214
The Australian Bureau of Mineral Resources (BMR)

first drew attention to Australias Hot Rock potential
in the Cooper Basin, other sub-basins beneath the
Eromanga Basin (Queensland, New South Wales,
South Australia); the McArthur Basin (Queensland/
Northern Territory); the Otway Basin (Victoria, South
Australia); the Carnarvon, Canning and Perth basins
(Western Australia); areas in east Queensland; and
the Sydney Basin north-west of Newcastle (Somerville
et al. 1994). In the Cooper Basin, they reported
extrapolated temperatures in excess of 300C at
5km depth, and estimated the heat energy available
in rocks at temperatures above 195C at 7.8 million
PJ (Somerville et al. 1994). This work was based
largely on a compiled database of temperatures
recorded at the bottom of deep drill holes, most of
which were drilled for petroleum exploration. This
GEOTHERM database has evolved through work
at the Australian National University and Earth
Energy Pty Ltd to become the AUSTHERM database,
maintained and updated by Geoscience Australia.
Until recently, this has been the only database
of significant use to geothermal explorers, and
exploration in Australia was initially limited in location
to areas of petroleum exploration activity because
are needed to provide a better understanding of
Australias geothermal energy potential, particularly
near potential major markets.
Geothermal exploration
With the great variety of geological systems and enduse applications now being considered, there are not
many areas in Australia where geothermal potential
has been ruled out.
Figure 7.11 shows areas of active exploration and
development. It is important to note that many of the
areas under exploration do not appear to be of high
temperature on the map: this underscores the fact
that bottom hole temperatures used alone are an
insufficient geological dataset.
There are numerous explorers in each of the Cooper
Basin, the Mount Painter InlierFrome Embayment,
and the Otway Basin, and many of these companies
have announced inferred geothermal resources.
this was the only available relevant dataset. However,

this dataset has a number of inadequacies and does
not fully represent Australias geothermal potential.
More recently, explorers have gained a better
understanding of the geology of Hot Rock systems,
and have expanded the range of geothermal
exploration plays by using a greater range of
geoscience information. This, together with the
acquisition of new data specifically for geothermal
exploration most notably heat-flow measurements
has increased the exploration search area.
Exploration models being implemented in Australia
now cover a range of targeted temperatures from
as low as 60C for direct-use applications, to as
high as 250C. Reservoirs being targeted include
granite and metasedimentary rocks requiring fracture
enhancement for Hot Rock developments, and deep
natural aquifers for Hot Sedimentary Aquifer systems.
Most explorers are aiming to achieve suitable
temperatures within 4 km depth from surface, but
some explorers are considering depths of 5.5 km and
greater. These geological systems are being targeted
for electricity generation or for direct-use applications,
or both via cascading arrangements that enable
multiple uses of the same fluid at successively lower
temperatures.
Exploration for geothermal resources is rapidly
gaining momentum and new geological opportunities
are being recognised. The first geothermal exploration
licence in Australia was granted in 2000 and by
January 2010, 54 companies held 409 leases over
an area of 432 000 km2. Committed exploration work
programs, to be undertaken in every State, amount
to more than $1 billion for the period 20022014
(Long et al. 2010).
Other areas where resources have been announced
include: the Perth Basin (Western Australia); the
broad area around Olympic Dam and Lake Torrens,
Port Augusta (all South Australia); central Tasmania;
the Gippsland Basin, Mildura (Victoria); the area
south east of Mount Isa, near Nagoorin (Queensland);
and the upper Hunter Valley (New South Wales).
Exploration projects listed in boxes 7.4 and 7.5
illustrate the range of geothermal targets.
Hot Rock geothermal resources

Exploration has been largely focused on the high
temperature Hot Rock geothermal resources of South
Australia (Cooper Basin, Adelaide Fold Belt, Mount
Painter InlierFrome Embayment (box 7.4). Each
of these areas has an underlying basement that
includes high heat-producing granites of Proterozoic
age. The depth of sedimentary cover varies from
relatively shallow along the margins of the Mount
Painter Inlier to more than 5 km in the Cooper Basin.
Box 7.4 Hot Rock geothermal exploration and resources in Australia

This box summarises the Hot Rock exploration
projects shown on figure 7.11 as letters A to G.
Area A: Geodynamics Ltd Cooper Basin area.
Geodynamics Ltd have shown temperatures in excess
of 270C at 4911 m depth in granite buried beneath
approximately 3800 m of sediment. Geodynamics
Ltd achieved proof-of-concept of sustained fluid flow
between an injector and production well couplet
and the surface in March 2009. The company
has announced plans for a 25 MW commercial
demonstration plant to be operational by December
2013 and this is being supported by a grant of
$90 million through the Australian Governments
Renewable Energy Demonstration Program. The
estimated thermal resource in the 1962 km2 of
lease area in the Cooper Basin is approximately
400 000PJ, with an estimated energy resource to
support power development of between 5000 and
10000 MW (www. geodynamics.com.au).
Area B: Petratherm Ltd Paralana project area.
Petratherm Ltd have partnered with Beach Petroleum
and TRUenergy on the Paralana Hot Rock project
in the Mount PainterFrome Embayment area of
South Australia. The geological model here is a
significant variant on the normal Hot Rock model,
and Petratherm intend to create a Heat Exchanger
Within Insulator meaning fracturing within the
metasedimentary insulating rocks rather than
the heat-producing granite. The project received a
$7 million grant through the Australian Governments
Geothermal Drilling Program, and has completed
the Paralana 2 well to a depth of 4 km in November
2009. An independent assessment has estimated
a total inferred geothermal resource of 230 000
40000 PJ. The Projects immediate plan is for a
30MW commercial demonstration project to provide
power to local consumers (particularly uranium mines)
and this is being supported by a grant of $63million
through the Renewable Energy Demonstration
Program. Petratherm has a long term development
plan to deliver a minimum of 260 MW of base-load
power into the National Electricity Market (NEM) Grid
from the Paralana site (www.petratherm.com.au).
Area C: Torrens Energy Ltd Parachilna project
area. Torrens Energy Ltd considers that the general
area of the Adelaide Fold Belt and the Torrens
Hinge Zone has the right components for Hot Rock
potential, including high heat flow, good potential for
high heat-producing basement including granites,
and thick insulating layers. The AUSTHERM map of
predicted temperature at 5 km depth (figure 7.11)
did not show this area to be hot due to a lack of
temperature data.
Torrens Energy received an Australian Government
Renewable Energy Development Initiative grant of
approximately $3 million to conduct exploration via
heat flow measurements and to build a 3 dimensional
Thermal Field Model. The Treebeard 1A well was

drilled to 1807 m and confirmed high heat flow
with modelled temperatures in excess of 200C at
4500m, and seismic surveying in the area indicates
sediment thicknesses of between 3000 to 4500m.
A basement (i.e. granite) hosted reservoir is the
primary target and preferred model for geothermal
development at Parachilna, and the Company has
estimated an Inferred Geothermal Resource of
150000 PJ within the basement. Torrens Energy
plans to drill a 4 km confirmation well at Parachilna.
This project is being supported by a $7 million
Geothermal Drilling Program grant.
Torrens Energy entered into a Geothermal
Alliance Agreement with AGL Energy Ltd in 2008,
which provides for the joint development and
commercialisation of base-load geothermal projects
close to the NEM grid (www.torrensenergy.com.au).
Torrens Energy have also conducted exploration in
the immediate vicinity of the Port Augusta power
plant where they have demonstrated high heat flow.
Area D: Green Rock Energy Ltd Olympic Dam
project area. Green Rock Energy Ltd have drilled
one deep (approximately 2000 m) exploration well,
Blanche No. 1, only 10 km away from the BHP
Billiton Ltd Olympic Dam Special Mining Lease and
5 km from a 275 kV and 132 kV transmission line
connected to the NEM grid. The well provides good
information on subsurface temperatures and an
indication of the temperature gradient within the
Roxby Downs Batholith granite body. The inferred
temperature at 5500 m is 190C. Green Rock have
discussed plans for drilling to the east of Blanche 1
where the sediment cover is interpreted to be thicker.
Green Rock have conducted mini-hydrofracturing
experiments within Blanche No. 1 and successfully
demonstrated the ability to enhance fractures within
the granite, and to do so at multiple levels using
removable packers. This demonstrated the ability to
create sub-horizontal fracture networks including at
deeper levels, and is an important step in testing
expected reservoir conditions prior to more expensive
drill testing.
Green Rock have plans to ultimately develop a
400MWe power plant with an operation life of at
least 30 years (www.greenrock.com.au).
Area E: KUTh Energy Ltd Central Tasmania project
area. The map of predicted temperature at 5 km
based on bottom hole temperature data (figure 7.11)
suggests Tasmania has only limited geothermal
potential. However, several old measurements
show high heat flow values. KUTh Energy Ltd have
undertaken an extensive drilling program and
confirmed areas of anomalously high heat flows. They
have also conducted other surveys, including seismic
and extensive thermal conductivity measurements,
to indicate that there is a considerable thickness
215
of low-to-moderate thermal conductivity units above

what is interpreted to be deeply buried granites. KUTh
have announced an Inferred Geothermal Resource of
260000 PJ at Charlton-Lemont (central Tasmania)
(www.kuthenergy.com).
Area F: Geodynamics Ltd Hunter Valley project
area. The Somerville et al. (1994) report highlighted
an area of high temperature in the upper Hunter Valley
area. This was targeted by Australias first geothermal
company (the principals of which went on to form
Geodynamics Ltd). Although there is little information
publicly available about the project, Geodynamics
Ltd have reported thermal gradients similar to those
found in the Cooper Basin project. Geodynamics Ltd
are targeting a high heat-producing Paleozoic granite
buried beneath more than 3500 m of Sydney
Hot Sedimentary Aquifer geothermal resources
216
There are several sedimentary basins in Australia

where high geothermal gradients are known, including
the Otway Basin (South Australia, Victoria), Gippsland
Basin (Victoria), Perth Basin (Western Australia),
Carnarvon Basin (Western Australia) and the Great
Artesian Basin (Queensland, New South Wales, South
Australia, Northern Territory). These basins have
porous and permeable aquifers, which means that
hot water circulating naturally at depth within them
can be readily extracted. However, some fracture
enhancement may be necessary to increase flow
rates, especially in deeper parts of basins.
This potential has stimulated significant interest in
exploration for Hot Sedimentary Aquifer geothermal
resources in a number of basins, notably the Otway,
Gippsland and Perth basins (box 7.5). For example,
shallow groundwater systems in the Perth Basin
are being investigated as a potential source of low
temperature energy that could be used for direct
heating and other applications. The Otway Basin
differs from the other areas in that there is also
potential for heat input from dormant volcanic activity
that occurred some 5000 years ago. However,
previous regional heat-flow data showed no evidence
of abnormal heat-flow in the region, including around
Mount Gambier the youngest volcano in the Newer
Volcanics group in the south-west Victoriasoutheast South Australia region. More detailed heat
flow measurements identified a 40 km long zone
of elevated heat flow of uncertain origin (including
potentially buried granite) along the northern margin
of the Otway Basin (Matthews and Beardsmore
2009), and highlighted the need for higher resolution
data to identify finer scale variations in heat flow.
Direct Heat geothermal resources

Direct-use applications will generally require access
to low to moderate geothermal resources with at
Basin sediments including coal measures (www.

geodynamics.com.au). This project is being supported
by a $7 million Geothermal Drilling Program grant.
Area G: Geothermal Resources Ltd Frome project
area. The Frome project comprises buried Cambrian
basins known as the Moorowie and Yalkalpo subbasins that are underlain by relatively radiogenic
Precambrian volcanics and granites rocks of the
Curnamona Craton. Frome 12 was drilled to a
depth of 1761 m in the centre of a heat anomaly
identified from earlier shallow drilling. A bottom of
hole temperature of 93.5C was recorded shortly
after drilling ceased. This can be extrapolated to
a temperature of 200C at 4080 m. Geothermal
Resources Ltd plan further drilling to intersect granite
at about 3 km depth (www.geothermal-resources.
com.au).
least moderate flow rates. Direct-use applications
such as air conditioning for commercial and office
buildings via absorption chillers or making fresh
water via seawater distillation desalination will
generally require access to Hot Sedimentary Aquifer
geothermal resources.
Ground source heat pumps have potential in Australia,
although this technology is most cost effective in
geographic locations that have marked seasonal
temperature fluctuations. Estimating the full resource
potential is somewhat difficult this technology can
be applied anywhere, but local conditions and the
cost competitiveness of the technology are important
factors in influencing its uptake.
7.3.2 Geothermal energy market

To date, two geothermal energy projects have
been undertaken in Australia that demonstrated
geothermal electricity generation technologies in the
Great Artesian Basin (table 7.4).
In 1986, Mulka Station in South Australia used a
hot artesian bore to produce a maximum 0.02 MW
of power. However, as the project utilised a working
fluid on the power plant side that was subsequently
banned, it has since ceased operation.
Electricity generation from geothermal energy in
Australia is currently limited to one pilot power plant
producing 80 kW net at Birdsville in south west
Table 7.4 Geothermal energy projects in Australia
Project
Company
State
Start up
Capacity
Mulka
Station
Mulka
Station
SA
1986 (ceased
operations)
0.02 MW
Birdsville
Ergon
Energy
QLD
1992
0.08 MW
Source: Compiled from publically available reports by

Queensland. The plant uses a binary-cycle power

system, and sources hot (98C) waters at relatively
shallow depths from the Great Artesian Basin.
The water comes from the towns water supply bore,
which was not drilled specifically as a geothermal
bore. Total electricity generation in 2006 was
1.8 MWh, of which 0.5 MWh was provided by the
geothermal power plant with the remainder provided
by auxiliary LPG and diesel powered generators
(Ergon Energy 2009). The plant operator, Ergon
Energy, has commenced a feasibility study into
whether it can provide Birdsvilles entire power
requirements and relegate the existing LPG and
diesel-powered generators to be used only as a

back-up to meet peaks in electricity demand.
Direct-use applications
There are a number of small direct-use applications
of geothermal energy resources in Australia. At
Portland in Victoria, water from a single well was
used for heating several council-operated buildings
including council offices, library and hospital for a
number of years.
Numerous spas and baths operate in several parts
of Australia using warm spring waters. These include
Box 7.5 Exploration for Hot Sedimentary Aquifer Resources in Australia

This box summarises exploration for Hot Sedimentary
Aquifer geothermal resources shown as numbers 16
on figure 7.11.
In the Otway Basin, three companies have projects
underway: Panax Geothermal Ltd at the Penola
project (1 on figure 7.11), Hot Rocks Ltd at Koroit
(2) and Greenearth Energy Ltd at Geelong (3). All
projects are Hot Sedimentary Aquifer-style, and have
as targets a sequence of sandstone aquifers within
early Cretaceous sediments expected to contain water
at temperatures in the range 140180C at depths
of between 2500 to 3500 m. Panax Geothermal
Ltd received a $7 million grant from Round 1 of
the Australian Governments Geothermal Drilling
Program, and are scheduled to drilling their first
deep production well in early 2010. The company
has been in discussion with owners of nearby
petroleum companies regarding the use of existing
otherwise unused wells as an injection well. Panax
Geothermal Ltd has a development plan to build a
59 MW (net) generator within a project timeframe of
24 months once proof-of-concept is complete (www.
panaxgeothermal.com.au). Hot Rocks Ltd has been
awarded a $7 million Geothermal Drilling Program
grant for the Koroit proof of concept project (www.
hotrockltd.com). The Greenearth Energy Ltd project
at Geelong has also been awarded a $7 million
Geothermal Drilling Program grant, and also a $25
million Victorian Government Energy Technology
Innovation Strategy grant.
In the Gippsland Basin, Greenearth Energy Ltd have
a project in the LaTrobe Valley, and a principal aim of
this Hot Sedimentary Aquifer and direct-use project
is to assist in decreasing the carbon intensity of this
brown-coal region (www.greenearthenergy.com.au)
(4 on figure 7.11). The target aquifer is the Rintouls
Creek Formation where temperatures greater than
150C are expected between 32504000 m depth.
The Perth Basin (5 in figure 7.11) is a 1000 km long
geological rift containing sediments up to 15km
thick. It contains thick sequences of permeable
aquifers containing hot geothermal water with
sufficient temperature and water flow capacity at

depths considered to be economic for electricity
generation. Green Rock Energy Ltd, in conjunction
with the University of Western Australia, is preparing
for the development of Australias first commercial
geothermal powered heating and air-conditioning unit,
in a commercial building in the Perth Metropolitan
area. The geothermal energy will be the direct
heat source which will replace conventional airconditioners and their associated large scale
electrical and natural gas consumption. The company
is working towards the drilling of the geothermal
wells in late 2009 with the commissioning of the
commercial unit in 2011. By replacing a Conventional
Chiller that uses electric energy with an Absorption
Chiller using geothermal energy, large commercial
buildings, including universities, hospitals, hotels,
airports, data centres and shopping centres, can be
air-conditioned using hot geothermal water as the
principal power source. The project will need to drill
two wells to approximately 2500 m depth to extract
water at temperatures greater than 75C. This project
is being supported by a $7 million Geothermal Drilling
Program grant (www.greenrock.com.au).
The Great Artesian Basin (GAB) is the largest
artesian basin in the world covering about 22 per
cent of the Australian continent and has ground
waters of 30100C at the well head. Australias only
operating geothermal power plant at Birdsville uses
water at 98C drawn from the GAB. The temperature
of the water varies across the Basin, and is
understood to be hottest in northeastern South
Australia (6 on figure 7.11). Several companies
have exploration leases in this area. The maximum
water temperature is thought to be less than
140C, which is at the lower limit for generating
electricity at a large commercial scale. The added
cost of transmission infrastructure is likely to
make electricity generation for supply into the NEM
uneconomic in the near future, however local supply
is likely to be competitive against power generated by
diesel or gas generators (as is the case at Birdsville).
217
spa developments (Mornington Peninsula, Victoria

and Mataranka, Northern Territory), artesian baths
(Moree, Lightning Ridge artesian baths, and Pilliga
Hot Artesian bore, inland New South Wales) and
swimming pool heating (Challenge Stadium, Western
Australia). Ground source heat pumps are used in
several public buildings, including at Geoscience
Australia in Canberra.

Australias geothermal
Australias considerable high-temperature (above
180C) geothermal energy potential associated with
deep Hot Rock resources and lower temperature
resources associated with hot waters circulating in
aquifers in sedimentary basins (Hot Sedimentary
Aquifer resources), have potential for electricity
production and direct use. The requirements for
development of geothermal electricity generation
include significant investment, firstly in demonstration
projects to prove viable generation, and then
in commercialisation. Government policy and
direct support for research, development and
demonstration are likely to continue to play a
significant role in this process until commercial
viability can be established.
218
Geothermal power has significant benefits,

including being environmentally benign, renewable
(temperature is renewed by conduction from
adjacent hot rocks, and heat is generated by natural
radiogenic decay), and able to provide base-load
power and heat for industrial processes. Ground
source heat pumps have been proven to be viable
in various parts of Australia, and widespread
implementation could provide a significant energy
efficiency and carbon reduction benefit.
7.4.1 Key factors influencing the future

development of Australias geothermal
energy resources
Australias existing indicated geothermal resources
are sufficient to meet projected domestic demand
over the period to 2030. There is also scope
for Australias geothermal resources to expand
substantially, based on further predicted temperature
at 5 km data, heat flow measurements and
enhanced general geological knowledge. This in turn
could affect the market outlook as several expected
proof-of-concept projects demonstrate the suitability
of the technology to Australia and commercial
demonstration projects are established. However,
some of Australias geothermal resources lie remote
from the existing electricity transmission grid.
Box 7.6 Australian Geothermal Industry Development Framework

The Australian Geothermal Industry Development
Framework and the associated Australian Geothermal
Industry Technology Roadmap were released in
December 2008 (see Australian Government
2008a, b). The framework recognised that Australias
geothermal industry is at a very early stage of
development and identified major challenges for the
future of the industry including the development of:
an attractive investment environment in which
early stage ventures are able to mature to a level
sufficient to attract private finance;
accurate and reliable information on geothermal
energy resources in Australia;
networks that encourage sharing of information
and experience between stakeholders including
companies, researchers and governments in
Australia and overseas;
geothermal technologies suited to Australian
conditions;
a skilled geothermal workforce;
community understanding and support of the
economic, environmental and social benefits of
geothermal energy;
a geothermal sector which understands and can
contribute to the institutional environment within
which it operates; and

a consistent, effective and efficient regulatory
framework for geothermal energy.
Several recommendations have been significantly
advanced already. For example, three key outcomes are:
The first edition of the Australian Code for Reporting
of Exploration Results, Geothermal Resources and
Geothermal Reserves has been published.
The Australian Governments $435 million
Renewable Energy Demonstration Program
in November 2009 awarded $90 million to
Geodynamics Ltds Cooper Basin Commercial
Demonstration Program, and $63 million to
Petratherm Ltds Paralana project.
The Australian Governments $50 million
Geothermal Drilling Program, administered by the
Department of Resources, Energy and Tourism,
has provided seven grants of each of $7 million
for proof-of-concept projects in Hot Rock and Hot
Sedimentary Aquifer settings for both electricity
generation and direct-use applications.
In addition, the Victorian Energy Technology
Incentive Scheme has awarded $25 million to
a geothermal project out of a total of $72 million
of grants.
Government support for geothermal energy

research, development and demonstration
(RD&D)
Government policies relating to geothermal energy
research, development and demonstration (RD&D)
are critical to the outlook for electricity generation
from geothermal energy in Australia. Actions to
accelerate the development of the geothermal
industry include completion of the Australian
Geothermal Industry Development Framework and
the associated Australian Geothermal Industry
Technology Roadmap (box 7.6). Direct assistance
includes the Australian Governments $50 million
Geothermal Drilling Program, administered by the
Department of Resources, Energy and Tourism, which
has provided grants of $7 million for seven proof-ofconcept projects in Hot Rock and Hot Sedimentary
Aquifer settings. The Australian Government has also
provided funding to assist two geothermal projects
to a total of $153 million to progress from proof-ofconcept to commercial demonstration stage from
its $435 million Renewable Energy Demonstration
Program. These programs which provide funding
to projects on a merit-basis will accelerate the
development of the geothermal industry by helping
to address the key impediment to development of
insufficient market investment. It is expected that
the funding will not only assist companies to finance
their respective stages of activity in the projects and
reduce financial risk to investors but have the longer
term impact of lowering the technical risk of both
stages of geothermal developments, and therefore
increasing investor confidence.
Better definition of geothermal resources

improved basic geoscientific data to enhance
development prospects for geothermal energy
The AUSTHERM database of bottom hole
temperatures is largely populated by petroleum
drilling results. Of necessity, this dataset is biased
towards particular geological settings, i.e. basins.
Geothermal resources are not limited to the same
geological settings as petroleum resources. Not only
is the geographical distribution of this data uneven
and inadequate, measurements of bottom hole
temperature are not robust for predicting temperature
at depth.
Heat flow measurements are normally significantly
more robust indicators of temperature at depth.
However, in addition to the gradient and conductivity
data necessary, other geological data including
lithologies at depth are very important to make
confident temperature extrapolations. Both the
number and distribution of publicly-available heat
flow measurements, and the knowledge of geology
at depth, are inadequate for efficient geothermal
exploration in Australia.
Given the potential for geothermal to be a significant

energy source in the future, there is support for
government programs to increase the collection and
dissemination of basic pre-competitive geoscientific
data to guide future geothermal exploration (see,
for example, Hogan 2003). Government investment
in a geothermal resources database will also
complement private sector activity in the geothermal
industry and enhance prospects for future geothermal
energy development in Australia. The priorities are
summarised in Box 7.7.
Geothermal RD&D and technology

development
Further research in the exploration and enhancement
of reservoirs and in drilling and power generation
technology, particularly for the exploitation of low
temperature geothermal resources, will be important
in realising potential in this area (IEA 2008; box 7.3).
Technology developments in oil and gas production
and carbon storage, such as horizontal wells,
expandable solid tube technology, rock fracturing
and improved seismic technology, will also benefit
geothermal electricity generation (IEA 2006).
It is important to note that the development of the
geothermal industry in Australia is not dependent on
major technology breakthroughs all of the required
technology exists from the conventional geothermal
and petroleum industries, and to a large degree it
is a matter of a trial-and-error learning process in
adapting this technology. The challenges in Australian
geothermal systems are more about making
exploitation more economically viable (for example
through cheaper drilling), requiring incremental
technological adaptation and development rather
than major technological breakthroughs.
As many other countries around the world (especially
the United States) have very large untapped Hot
Rock geothermal resources there is a technology
development push worldwide. Geothermal resources
in Hot Sedimentary Aquifer systems are also being
brought into production around the world, providing
another source of experience and technology
developments internationally.
Ground source heat pumps have already been
demonstrated to be economically and environmentally
beneficial in numerous installations in Australia.
As a consequence of the geothermal industry being
new to Australia, only limited research has been
conducted to date but this is now developing quickly
and it is expected that Australian research capability
will continue to grow. Several research centres have
been established, including:
The University of Queensland has a $15 million
program mostly investigating power conversion
technologies;
219
Box 7.7 Improving knowledge of Australias geothermal potential

Because of the inadequate geoscience data available
to the industry in Australia, exploration has only been
undertaken in limited areas having some useful data.
A good understanding of geology is a prerequisite for
developing geothermal resources and the knowledge
required is scale-dependent.
In selecting tenement areas for more detailed
exploration for geothermal resources in Australia
companies rely on publicly available, pre-competitive
regional scale geological data, as companies only
have the right to collect information on ground that
they have under lease. Once a company has taken
out a lease area, it then explores in increasing detail
for the quite small volume of rock that will produce
the most profitable geothermal resource.
Publicly available geoscience data that is sought for
evaluation by the geothermal exploration companies
comes from:
seismic reflection, gravity, magnetic and magnetotelluric surveys;
stratigraphic drilling in key locations and thermal
conductivity measurements for key stratigraphic
units throughout the country;
accurate depth to conductive basement maps
based on the activities above;
220
downhole temperature measurements;

granite geochemistry, particularly of buried
units; and
assessments of risks posed by geothermal
The Western Australian Geothermal Centre of

Excellence has $2.3 million to investigate directuse applications of geothermal energy including
absorption chillers;
The University of Adelaide is receiving a smaller
amount of funding mostly for research into
exploration and fracturing techniques; and
The University of Newcastle has a small program
also researching power cycle technology.
The demonstration of the economic viability of the
extraction and use of geothermal energy in the
domestic Australian energy market is required for
the future development of the industry. Several pilot
projects are expected to be advanced within the next
few years.
The cost of geothermal energy is expected

to continue to fall over the outlook period
The costs of hydrothermal energy have dropped
substantially since the 1970s and 1980s overall,
costs fell by almost 50 per cent from the mid
developments (including radiation/radon,

induced seismicity).
Many of the data types discussed above are already
being collected to varying degrees by Geoscience
Australia and State geological surveys, but this has
not been done in a systematic manner with geothermal
energy in mind. Some database development is
required to incorporate new data types (such as
thermal conductivity) and to make existing data more
accessible. Also data generated by companies and
reported as part of lease requirements needs to be
captured and made available.
Companies conduct more detailed studies in their
exploration leases, such as:
in-situ porosity and permeability measurements
or their proxies;
detailed measurements of crustal stress
distribution, including down-hole stress
measurements;
enhanced seismic monitoring, including
temporary deployment of detailed monitors during
hydrofracturing;
fluid chemistry and rock mineralogy to predict the
effects of scaling (mineral deposition that may
inhibit fluid flow either in the rock fracture network
or in the piping or power plant); and
fluid chemistry for use as a geothermometer in
exploration, and for studies of fluid-rock interaction
to predict and develop mitigation strategies for
scaling and corrosion during production.
1980s to 2000. Upfront costs, comprising mainly

of exploration, well-drilling and plant construction,
can comprise up to 7080 per cent of the overall
costs of geothermal electricity, depending on the
technology. For example, drilling costs can account
for as much as one third to one half of the total
cost of a geothermal project (IEA 2008). Operation
and maintenance costs account for a very small
percentage of total costs, but can vary depending
upon the location of the plant. Geothermal drilling
costs tend to rise exponentially with drilling depth
(figure 7.12). Company reports indicate that the cost
of drilling to a well depth of 5 km in Australia is in the
order of $1015million.
Hot Rock geothermal energy has only been deployed
commercially in one location (Landau, Germany, a
hybrid project that uses hydrofracturing) but is being
tested and developed at a number of locations. Like
conventional geothermal power systems, Hot Rock
geothermal systems have high up front costs, up to
7080 per cent of total costs, in developing the well
Completed well costs (million USD)
100
from the existing electricity transmission grid.

Geothermal developers pay the direct costs to connect
their plant to the grid, and sometimes may incur
additional transmission related costs, including the
construction of new lines, upgrades to existing lines,
or new transformers and substations (Kagel 2006).
10
1.0
AERA 7.12
0.1
0
2000
4000
6000
8000
Depth (metres)
Hot dry rock (actual)
Hot dry rock (predicted)
Geysers (actual)
Other hydrothermal (actual)
Hydrothermal (predicted)
Geothermal (actual)
Joint Association Survey oil and gas average
Joint Association Survey ultra deep
Figure 7.12 Completed well costs as a function of depth

Source: Augustine, Tester and Anderson 2006
field at the geothermal resource. Hot Sedimentary

Aquifer geothermal technology is considered to be
of lower risk and cheaper than Hot Rock technology
because it involves generally shallower drilling and
generally does not require reservoir stimulation
through hydrofracturing. However, high flow rates
are required.
The cost of electricity produced from geothermal
energy sources, both Hot Sedimentary Aquifer and
Hot Rock, are expected to fall over the next 1020
years as the technologies mature. A considerable
advantage that geothermal electricity generation has
over other renewable energy generators is that it is
base load with high capacity and availability factors
(each greater than 90 per cent). It will classify as a
scheduled generator under the Australian Electricity
Market rules in the eastern half of Australia.
This impediment may be lessened by the proposed

changes to the National Electricity Market rules by
the Australian Energy Market Commission (AEMC)
that include the introduction of a new framework for
the connection of generation clusters in the same
location over a period of time. The recommended
model overcomes the lack of commercial incentives
for network businesses to bear the risk of building
assets to an efficient scale (AEMC 2009). This is
called Scale Efficient Network Extension (SENE) and
will assist geothermal (and other renewable energy)
projects to overcome the relatively high cost of
accessing the electricity grid. The geothermal industry
is investigating the cost impacts of transmission
connection to the National Electricity Market. One
study focussing on connection from the Cooper
Basin to Port Augusta via the Arrowie Basin suggests
benefits to both generators and customers if the
transmission network is built to coincide with the
onset of geothermal production (MMA 2009).
There is scope for some industries to co-locate to new
geothermal generators. For example, Geodynamics Ltd
have been investigating the establishment of a large
data centre at Innamincka in the Cooper Basin. In this
case it is cheaper to lay fibre optic cable than power
lines to the major centres.
Environmental considerations
Geothermal energy is generally regarded as one of
the most environmentally-benign sources of electricity
generation.
A potential impediment to the development of some

of Australias geothermal resources for geothermal
electricity generation is the distance of some of
the resources from existing transmission lines
or consumption centres. Most geothermal plants
are built at the site of the reservoir since it is not
practical to transport geothermal resources over long
distances. High-voltage direct current transmission
lines are used because for a given carrying power
capacity they have less line loss (MIT 2006).
Air emissions geothermal fields in Australia will

generally utilise groundwater systems, and will
have very few air emissions especially if using
a double closed loop system. Some concerns
have been raised over radon release; however
these are projected to be well within Australian
occupational health and safety guidelines
(PIRSA 2009). The only emissions created
are in building infrastructure (well completion,
plant, power lines) which is necessary for all
generation technologies. There are no emissions
associated with the fuel. Some volcanic systems
used in other parts of the world emit CO2 as
a natural part of magma outgassing: this is a
natural process that happens whether used for
geothermal power production or not; and Australia
has no such active volcanism.
Additional power lines must be built if transmission

infrastructure does not exist where a geothermal
resource is located. Some of Australias known
geothermal resources are located in areas remote
Noise pollution geothermal plants produce

noise during the exploration drilling and
construction phases. With direct-heat
applications, noise is usually negligible during
Cost of access to the grid
221
operation. Noise from normal operation of power

plants generally comes from the cooling tower
fans, steam ejector and turbine.
222
Water usage geothermal systems in Australia

are generally expected to be operated as closedloop systems for a number of reasons, including
water conservation. For Hot Rock developments,
the loss of water injected into the artificial
reservoir would result in operational inefficiencies
through higher pumping costs and lower energy
returns than optimal and are therefore to be
avoided. In Hot Sedimentary Aquifer systems,
water needs to be returned to the originating
aquifer otherwise the reservoir pressure will be
depleted and water returns will be reduced. In
Hot Rock systems requiring hydrofracturing to
enhance the reservoir permeability, water will
need to be introduced from the surface during the
fracturing process. This is in the order of tens of
megalitres to create a reservoir volume of up to
10 cubic kilometres. This is a one-off use, and
this water will generally continue to serve as the
circulation fluid during production. In recognition
that they will generally be working in areas of very
low rainfall, Australian geothermal developers are
mostly planning to use air-cooled power stations.
Some research is being conducted into using
ground-loop cooling or novel air-cooled systems to
assist power plant efficiency during peak daytime
temperatures, and also to using solar energy to
boost input water temperatures to increase power
plant efficiencies. Other generators of power may
also benefit from this technology.
Subsidence this was found to be a problem
during some early conventional geothermal
developments overseas. Reinjection of
groundwaters became a common practice to
prevent this. Geothermal reservoirs in Australia
are considerably deeper than conventional
reservoirs overseas, and this combined with
reinjection mean that subsidence is most unlikely
to be of concern.
Induced seismicity this term is used to
describe earth movements generated by
human activities. Induced earth movements are
associated with the movement of material into
or out of the earth, for example during water

reservoir filling, underground mining, oil and gas
extraction, compressed carbon dioxide injection,
and development of Hot Rock reservoirs. The
hydrofracturing process employed in the creation
of Hot Rock reservoirs can induce seismic activity,
which can be detected by sensitive seismological
instruments (Lewis 2008). In over thirty years
of hydrofracturing in Hot Rock developments
overseas and more recently in Australia, there
have been no instances of damage caused by
earthquakes directly attributed to hydrofracturing.
Substantial knowledge is being gained about
controlling the incidence of microfracturing by
varying the rates and pressures of fluid injection.
Ultimately this will lead to better reservoir
development with minimal risk from unwanted
seismicity. Earthquakes are commonly reported
using a Magnitude scale, and this describes the
intensity of the earthquake at its origin: it does
not provide information on the effects at surface,
which can be many kilometres above and away
from the point of origin. Ground motion sensors
provide information about the extent of movement
at a point on the surface and are a significantly
better way of monitoring the surface effects of
induced seismicity.
7.4.2 Outlook for geothermal

energy market
The major geothermal energy developments
occurring in Australia are focused on electricity
generation. Several companies have plans for pilot
and demonstration plants, and some for commercial
generation. Given the major investment in geothermal
energy RD&D by both government and industry in
Australia, it is considered likely that geothermal
power will be produced on a commercial scale over
the period to 2030.
There is considerable uncertainty surrounding
projections of geothermal energy in the period to
2030. The commercial development of the industry
is dependent on the demonstration in Australia
of commercial viability to show an acceptable
investment risk, and this includes grid connection
issues. No technology breakthroughs are needed,
Table 7.5 Geothermal projects under development, as of October 2009

Project
Company
Location
Status
Start up
Capacity
Capital
Expenditure
Moomba
stage 2
Geodynamics Ltd
Moomba, SA
Demonstration
plant under
construction
2013
25 MW
na
Paralana
Petratherm
Pty Ltd
Mount Painter,
SA
First well completed,

feasibility underway
na
30 MW
$200 m
Penola
Panax
Geothermal Ltd
Limestone
Coast, SA
Commenced first
well
na
59 MW
$340 m
Source: ABARE 2009; Geodynamics Ltd 2009, Panax Geothermal Ltd 2009
but advances in technologies that reduce costs will

potentially lead to greater market penetration by
geothermal energy.
In the latest ABARE long-term energy projections
which incorporate the Renewable Energy Target,
a 5 per cent emissions reduction target and other
government policies, geothermal electricity generation
is projected to increase to annual production of
around 6 TWh in 202930 (ABARE 2010). This
represents around 1.5 per cent of Australias
projected electricity generation in that year.
Geothermal energy is projected to be the fastest
growing source of electricity to 2030, albeit from a
near zero base. Electricity is projected to be supplied
initially by demonstration plants but commercial scale
plants are expected to be in operation by 2030.

The Geodynamics Ltd project in the Cooper Basin
in South Australia is the most advanced Hot Rock
geothermal project in Australia. Geodynamics
Ltd completed proof-of-concept at their Habanero
prospect in early 2009. Geodynamics Ltd has
also started drilling two other prospects (Savina
and Jolokia). Geodynamics Ltds tenements in the
Cooper Basin have been shown to contain more than
400000 PJ of high-grade thermal energy.
Geodynamics Ltd have begun development of a
25 MW Commercial Demonstration Project for
completion by 2013 (table 7.5). In November
2009 Geodynamics Ltd was awarded a $90 million
Renewable Energy Demonstration Program grant to
assist the commercial demonstration project.
Petratherm Ltd have completed drilling well Paralana
2 at their Paralana Hot Rock Heat Exchanger Within
Insulator project. Together with Joint Venture partners
Beach Petroleum and TRUenergy, the project aims to
build a 7.5 MW pilot plant to supply power to nearby
uranium mines and to then scale up to a 30 MW
demonstration plant connected to the NEM grid (table
7.5). In April 2009 Petratherm Ltd was awarded a
$7 million Geothermal Drilling Program grant, and
in November 2009 was awarded a $62.75 million
Renewable Energy Demonstration Program grant to
assist development of their demonstration project.
Panax Geothermal Ltd started drilling the Salamander
1 well at the Penola Hot Sedimentary Aquifer project
having received a $7 million grant from Round 1 of
the Geothermal Drilling Program. Panax Geothermal
Ltd has announced plans for the rapid development
of a 59 MW (net) commercial plant at their Penola
project in the Limestone Coast area of South
Australia (Panax Geothermal Ltd 2009).
7.5 References
Economics), 2009, Electricity generation: major development

Review of Energy Market Frameworks in light of Climate
Change Policies: Final Report, September, Sydney
Australian Government Department of Resources, Energy
and Tourism (RET), 2008a, Australian Geothermal Industry
Development Framework, Canberra, December,
<http://www.ret.gov.au>
Australian Government Department of Resources, Energy
and Tourism (RET), 2008b, Australian Geothermal Industry
Technology Roadmap, Canberra, December, <http://www.
ret.gov.au>
Ayling BF, Budd AR, Holgate FL and Gerner E, 2007a,
Electricity Generation from Geothermal Energy in Australia,
Geoscience Australia Fact Sheet, GEOCAT # 65455, Canberra,
<http://www.ga.gov.au/image_cache/GA10663.pdf>
Ayling BF, Budd AR, Holgate FL and Gerner E, 2007b,
Direct-use of Geothermal Energy: Opportunities for Australia,
Geoscience Australia Fact Sheet, GEOCAT # 65454, Canberra,
<http://www.ga.gov.au/image_cache/GA10660.pdf>
Augustine C, Tester JW, and Anderson B, 2006, A
Comparison of Geothermal with Oil and Gas Well Drilling
Costs, Proceedings of the 31st Workshop on Geothermal
Reservoir Engineering, Stanford University, California, 30
January to 1 February, <http://pangea.stanford.edu/ERE/
pdf/IGAstandard/SGW/2006/augustin.pdf>
Budd AR, 2007, Australian radiogenic granite and
sedimentary basin geothermal hot rock potential map
(preliminary edition), 1:5 000 000 scale, Geoscience
Australia, Canberra
Budd AR, Holgate FL, Gerner E, Ayling BF and Barnicoat A,
2008, Pre-competitive Geoscience for Geothermal Exploration
and Development in Australia: Geoscience Australias
Onshore Energy Security Program and the Geothermal Energy
Project. In Gurgenci H and Budd AR (eds), Proceedings of
the Sir Mark Oliphant International Frontiers of Science
Australia Geothermal Energy Conference, Record 2008/18,
Geoscience Australia, Canberra, p18, <http://www.ga.gov.
au/image_cache/GA11825.pdf>
Energy and Geoscience Institute, 2001, Geothermal Energy:
Clean Sustainable Energy for the Benefit of Humanity and
the Environment, University of Utah, May, <http://www.
geothermal.org>
Ergon Energy, 2009, Birdsville organic Rankin Cycle
geothermal power station, factsheet, <http://www.ergon.
com.au/Resources/Birdsville_GeoThermal_ORC.pdf>
Geodynamics Ltd, 2009, Presentation at Australian
Geothermal Energy Conference, Brisbane, 1113 November
Geothermal Resources Council, 2009, What is geothermal?,
<http://www.geothermal.org>
Goldstein BA, Hill AJ, Budd AR and Malavazos M, 2008,
Status of Geothermal Exploration and Research in Australia,
Geothermal Resources Council Transactions, Vol. 32, 7986
Hillis RR, and Reynolds SD, 2000, The Australian stress
map. Journal of the Geological Society, 157, 915921
Hogan L, 2003, Public Geological Surveys in Australia,
ABARE eReport 03.15, Prepared for the Department of
Industry, Tourism and Resources, Canberra, August
Balances (2009 edition), Paris
223
IEA, 2009b, World Energy Outlook 2009, OECD/IEA, Paris

IEA, 2008, Energy Technology Perspectives 2008: Scenarios
& Strategies to 2050, OECD/IEA, Paris
IEA, 2006, Energy Technology Perspectives 2006: Scenarios
& Strategies to 2050, OECD/IEA, Paris
IEA, 2003, Renewables for Power Generation: Status &
Prospects, OECD/IEA, Paris
IGA (International Geothermal Association), 2004, What is
Geothermal Energy?, Italy, <http://iga.igg.cnr.it/documenti/
geo/Geothermal%20Energy.en.pdf>
Kagel A, 2006, A Handbook on the Externalities,
Employment, and Economics of Geothermal Energy,
Geothermal Energy Association, Washington, DC
Lewis B, 2008, Induced Seismicity and Geothermal Power
Development in Australia, Geoscience Australia Fact Sheet,
GEOCAT # 66220, Canberra, <http://www.ga.gov.au/image_
cache/GA11478.pdf>
Lindal B, 1973, Industrial and other applications of
geothermal energy, Geothermal Energy: Review of Research
and Development, Paris, UNESCO, LC No. 72-97138,
135148
Long A, Goldstein B, Hill T, Bendall B, Malavazos M and
Budd A, 2010. Australian geothermal energy advances.
Presentation at Thirty-Fifth Workshop on Geothermal
Reservoir Engineering, Stanford University, Stanford,
California, United States, February, 2010
Matthews C and Beardsmore G, 2009, New heat flow data
from south-east Australia. Exploration Geophysics, 38,
260269
224
MIT (Massachusetts Institute of Technology), 2006,

The Future of Geothermal Energy Impact of Enhanced
Geothermal Systems (EGS) on the United States in the

21st Century, Idaho Falls, <http://geothermal.inel.gov/
publications/future_of_geothermal_energy.pdf>
MMA (McLennan Magasanik Associates), 2009, Preliminary
Assessment of the Value of a New 275 kV Transmission
line to connect Geothermal Resources to the NEM in South
Australia, Victoria, <http://www.agea.org.au/information/
publications/>
Panax Geothermal Ltd, 2009, Penola Project Limestone
Coast, South Australia 59 MW Stand Alone Case, Project
Evaluation, <http://www.panaxgeothermal.com.au/Images/
File/20090910%20PANAX%20SCALE%20UP%20CASE%20
WEBSITE%20VERSION.pdf>
PIRSA (Primary Industries and Resources South Australia),
2009, Radon and Naturally Occurring Radioactive Materials
(NORM) associated with Hot Rock Geothermal Systems,
Fact Sheet 1, Petroleum and Geothermal Group Minerals
and Energy Resources, <http://www.pir.sa.gov.au/__data/
assets/pdf_file/0013/113341/090107_web.pdf>
SKM (Sinclair, Knight, Mertz in collaboration with Monash
University), 2005, The geothermal resources of Victoria.
Sustainable Energy Authority of Victoria, <http://www.
sustainability.vic.gov.au/resources/documents/SKM_
Geothermal_Report.pdf>
Somerville M, Wyborn D, Chopra P, Rahman S, Estrella
D and Van der Meulen T, 1994, Hot Dry Rocks Feasibility
Study. Energy Research and Development Corporation.
Report 243. 133pp
WEC (World Energy Council), 2007, Survey of Energy
Resources 2007, London, <http://www.worldenergy.org/
documents/ser2007_final_online_version_1.pdf>
Chapter 8
Hydro Energy
8.1 Summary
Key messages

Hydroelectricity is a mature electricity generation technology and an important source of renewable

energy.
Hydroelectricity is a significant energy source in a large number of countries, although its current
share in total primary energy consumption is only 2.2 per cent globally and 0.8 per cent in Australia.
Hydroelectricity is currently Australias major source of renewable electricity but there is limited
potential for future further development.
Water availability is a key constraint on future growth in hydroelectricity generation in Australia.
Future growth in Australias hydroelectricity generation will be underpinned by the development of small
scale hydroelectricity facilities, and efficiency gains from the refurbishment of large scale hydro plants.
The share of hydro in Australias total electricity generation is projected to fall to around 3.5 per
cent in 202930.
8.1.1 World hydro energy resources

and market
Global technically feasible hydro energy potential
is estimated to be around 16500 TWh per year.
World hydroelectricity generation was 3078 TWh
in 2007, and has grown at an average annual rate
of 2.3 per cent since 2000.
Hydro energy is the largest source of renewable
energy, and currently contributes nearly 16 per
cent of world electricity production.
In the OECD region, hydroelectricity generation
is projected by the IEA to increase at an average
annual rate of only 0.7 per cent between 2007
and 2030, mainly reflecting limited undeveloped
hydro energy potential.
In non-OECD countries, hydroelectricity generation
is projected by the IEA to increase at an average
annual rate of 2.5 per cent between 2007 and
2030, reflecting large, undeveloped potential hydro
energy resources in many of these countries.
8.1.2 Australias hydro energy resources

Australias technically feasible hydro energy
potential is estimated to be around 60 TWh
per year.
Australia is the driest inhabited continent on
earth, with over 80 per cent of its landmass
receiving an annual average rainfall of less than
600 mm per year and 50 per cent less than
300mm per year.
High variability in rainfall, evaporation rates and

temperatures occurs between years, resulting in
Australia having very limited and variable surface
water resources.
Australia currently has 108 operating hydroelectric
power stations with total installed capacity of
7.8 GW (figure 8.1).

hydro energy resources
Potential for the development of new large scale
hydroelectricity facilities in Australia is limited.
However, the upgrade and refurbishment of
existing hydroelectricity infrastructure will
increase efficiency, and extend the life of facilities.
There is potential for small scale hydroelectricity
developments in Australia, and this is likely to be
an important source of future growth in capacity.
Water availability, competition for scarce water
resources, and broader environmental factors
are key constraints on future growth in Australian
hydroelectricity generation.
8.1.4 Australias hydroelectricity market

In 200708, Australias hydroelectricity use
represented 0.8 per cent of total primary energy
consumption and 4.5 per cent of total electricity
generation. Hydroelectricity use has declined
on average by 4.2 per cent per year between
199900 and 200708, largely as a result of
an extended period of drought.
225
120
130
140
150
10
DARWIN
Western Australia
30 MW
750 km
Queensland
648 MW
20
BRISBANE
South Australia
4 MW
PERTH
New South
Wales
4178.5 MW
SYDNEY
ADELAIDE
Hydro Power Station Capacity

10 - 200 MW
Victoria
532.4 MW
Drainage
201 - 500 MW
Tasmania
2255 MW
501 - 1000 MW
1001 - 1500 MW
30
MELBOURNE
ACT
1 MW
HOBART
40
Relative capacity of
hydro facilities
226
AERA 8.1
Figure 8.1 Major Australian operating hydro electric facilities with capacity of greater than 10MW
18
16
14
12
10
In ABAREs latest long-term energy projections that

include the Renewable Energy Target, a 5 per cent
emissions reduction target and other government
policies, hydroelectricity generation is projected to
increase from 12 TWh in 200708 to 13 TWh in
202930, representing an average annual growth
rate of 0.2 per cent (figure 8.2).
The share of hydro in total electricity generation
is projected to fall to 3.5 per cent in 202930.
Hydro energy is expected to be overtaken by wind
as the leading renewable source of electricity
generation during the outlook period.
TWh
In 200708, hydroelectricity was mainly generated

in the eastern states, including Tasmania (57 per
cent of total electricity generation), New South
Wales (21 per cent), Victoria (13 per cent) and
Queensland (8 per cent).
0
1999-00
2001-02
2003-04
2005-06
2007-08
2029-30
Year
(TWh)

generation (%)
Figure 8.2 Australias hydroelectricity generation to

202930
AERA 8.2

and world market
8.2.1 Definitions
Hydroelectricity is electrical energy generated when
falling water from reservoirs or flowing water from
rivers, streams or waterfalls (run of river) is channelled
through water turbines. The pressure of the flowing
water on the turbine blades causes the shaft to rotate
and the rotating shaft drives an electrical generator
which converts the motion of the shaft into electrical
energy. Most commonly, water is dammed and the
C H A P T E R 8 : H Y D R O ENER GY
flow of water out of the dam to drive the turbines is

controlled by the opening or closing of sluices, gates
or pipes. This is commonly called penstock. In some
countries, the potential energy of rivers, streams or
waterfalls is used, but this is less common.
Hydropower is the most advanced and mature
renewable energy technology and provides some level
of electricity generation in more than 160 countries
worldwide. Hydro is a renewable energy source
and has the advantages of low greenhouse gas
emissions, low operating costs, and a high ramp rate

(quick response to electricity demand).
Hydroelectricity has been used in some form since
the 19th century. The main technological advantage of
hydroelectricity is its ability to be used for either
base or peak load electricity generation, or both.
In many countries, hydro is used for peak load
generation, taking advantage of its quick start-up
and its reliability. Hydroelectricity is a relatively
simple but highly efficient process compared with
Box 8.1 Hydroelectricity technologies
Hydroelectricity generation
The energy created depends on the force or strength
of the water flow and the volume of water. As a
result, the greater the difference between the height
of the water source (head) and the height of the
turbine or outflow, the greater the potential energy of
the water. Hydropower plants range from very small
(10 MW or less) to very large individual plants with a
capacity of more than 2000 MW and vast integrated
schemes involving multiple large hydropower plants.
Hydropower is a significant source of base load and,
increasingly, peak load electricity in parts of Australia
and overseas.
Rivers potentially suitable for hydropower generation
require both adequate water volume through river
flows, which is usually determined by monitoring
using stream gauges, and a suitable site for dam
construction. In Australia virtually all hydropower
is produced by stations at water storages created
by dams in major river valleys. Many have facilities
to pump water back into higher storage locations
during off-peak times for re-use in peak times. In
some cases, the hydro plant can be built on an
existing dam. The development of a hydro resource
involves significant time and cost because of the
large infrastructure requirements. There is also
a requirement for extensive investigation of the
environmental impact of damming the river. This
generally involves consideration of the entire
catchment system.
Pumped storage hydroelectricity stores electricity
in times of low demand for use in times of high demand
by moving water between reservoirs. It is currently
the only commercial means of storing electricity once
generated. By using excess electricity generated
in times of low demand to pump water into higher
storages, the energy can be stored and released
back into the lower storage in times of peak demand.
Pumped-storage systems can vary significantly in
capacity but commonly consist of two reservoirs
situated to maximise the difference in their levels
and connected by a system of waterways with a
pumping-generating station. The turbines may be
reversible and used for both pumping and generating
electricity.
Pumped storage hydroelectricity is the largest-
capacity form of grid energy storage where it can

be used to cover transient peaks in demand and to
provide back-up to intermittent renewable energy
sources such as wind. New concepts in pumpedstorage involve wind or solar energy to pump water
to dams as head storage.
Mini hydro schemes are small-scale (typically less
than 10 MW) hydroelectric power projects that
typically serve small communities or a dedicated
industrial plant but can be connected to an electricity
grid. Some small hydro schemes in North America
are up to 30 MW. The smallest hydro plants of less
than 100 kW are generally termed micro hydro. Mini
hydro schemes can be run-of-river, with no dam
or water storage (see below), or developed using
existing or new dams whose primary purpose is local
water supply, river and lake water-level control, or
irrigation. Mini hydro schemes typically have limited
infrastructure requiring only small scale capital works,
and hence have low construction costs and a smaller
environmental impact than larger schemes. Small
scale hydro has had high relative costs ($ per MW)
but is being considered both for rural electrification
in less developed countries and further hydro
developments in OECD countries, often supported
by environmental policies and favourable tariffs
for renewable energy (Paish 2002). Most recent
hydropower installations in Australia, especially
Victoria, have been small (mini) hydro systems,
commencing with the Thompson project in 1989.
Run-of-river systems rely on the natural fall (head) and
flow of the river to generate electricity through power
stations built on the river. Large run-of-river systems
are typically built on rivers with consistent and steady
flow. They are significant in some overseas locations,
notably Canada and the United States. Mini run-of-river
hydro systems can be built on small streams or use
piped water from rivers and streams for local power
generation. Run-of-river hydro plants commonly have
a smaller environmental footprint than large scale
storage reservoirs. The Lower Derwent and Mersey
Forth hydro developments in Tasmania, for example,
each comprising six power stations up to 85 MW
capacity, use tributary inflows and small storages in
a step-like series.
227
Development and
Production
Storage
End Use Market
Development
decision
Industry
Project
Storage
Resource
definition and
site selection
Domestic
market
Electricity
Generation
Commercial
Residential
AERA 8.3
Figure 8.3 Australias hydro energy supply chain

228
other means of generating electricity, as it does not

require combustion.
(onshore sources). Wave and tidal energy is

discussed in chapter 11.
Hydroelectricity generation is often considered a

mature technology with limited scope for further
development. Plants can be built on a large or small
scale, each with its own characteristics:
8.2.2 Hydroelectricity supply chain
Large scale hydroelectricity plants generally

involve the damming of rivers to form a
reservoir. Turbines are then used to capture the
potential energy of the water as it flows between
reservoirs. This is the most technologically
advanced form of hydroelectricity generation.
Small scale hydroelectricity plants, including mini
(less than 5 MW), micro (less than 500 kW) and
pico facilities, are still at a relatively early stage of
development in Australia, and are expected to be
the main source of future growth in hydroelectricity
generation. While there is no universally accepted
definition of small scale hydroelectric projects,
small projects are generally considered as those
with less than 10 MW capacity.
Within these two broad classes of hydroelectric
facilities, there are different types of technologies,
including pumped storage and run-of-river (box 8.1).
The type of system chosen will be determined by
the intended use of the plant (base or peak load
generation), as well as geographical and topographical
factors. Each system has different social and
environmental impacts which must be considered.
In this report, electricity generated from wave and
tidal movements (coastal and offshore sources) is
treated separately to that generated by harnessing
the potential energy of water in rivers and dams
Figure 8.3 is a representation of hydroelectricity

generation in Australia. In Australia virtually all
hydroelectricity is produced by stations at water
storages created by dams in major river valleys. A
number have facilities to pump water back into higher
storage locations during off-peak times for re-use in
peak times. Electricity generated by the water turbines
is fed into the electricity grid as base load and peak
load electricity and transmitted to its end use market.
8.2.3 World hydroelectricity market

Hydro energy is a significant source of low cost
electricity generation in a wide range of countries.
At present, production is largely concentrated in
China, North America, OECD Europe and South
America. However, many African countries are
planning to develop their considerable hydro energy
potential to facilitate economic growth. World
hydroelectricity generation is projected to grow at an
average annual rate of around 2 per cent to 2030,
largely reflecting the increased use of hydroelectricity
in developing economies.
Resources
Most countries have some potential to develop
hydroelectricity. There are three measures commonly
used to define hydro energy resources:
Gross theoretical potential hydro energy
potential that is defined by hypothesis or theory,
with no practical basis. This may be based
on rainfall or geography rather than actual
measurement of water flows.
Technically feasible hydro energy potential that

can be exploited with current technologies. This is
smaller than gross theoretical potential.
Economically feasible technically feasible
hydro energy potential which can be exploited
without incurring a financial loss. This is the
narrowest definition of potential and therefore
the smallest.
generation, and economically feasible potential of

more than 1750 TWh per year (Hydropower and Dams
2009). China is also home to the largest single
hydroelectricity project in the world, Three Gorges.
This site, when completed, will have a capacity of
22 500 megawatts. It generated almost 50 TWh of
electricity in 2006 (representing only around 31per
cent capacity utilisation), more than three times
Australias total hydroelectricity generation.
The worlds total technically exploitable hydro energy

potential is estimated to be around 16500 TWh per
year (WEC 2007). Regions with high precipitation
(rainfall or melting snow) and significant topographic
relief enabling good water flows from higher to lower
altitudes tend to have higher potential, while regions
without precipitation, that are flat or do not have strong
water flows have lower potential. Regionally, Asia,
Africa and the Americas have the highest feasible
potential for hydroelectricity (figure 8.4).
In Africa, the Democratic Republic of the Congo has

the highest hydro energy potential, while Norways
potential resources are the highest in Western
Europe. In South America, the highest hydro energy
potential is in Brazil, where it exceeds 2200 TWh
per year. Other countries with substantial potential
include Canada, Chile, Colombia, Ethiopia, India,
Mexico, Paraguay, Tajikistan and the United States.
Nevertheless, almost all countries have some hydro
energy potential.
Chinas hydro energy resources are the largest

of any country. China is estimated to have a
theoretical potential of more than 6000 TWh per year,
approximately double current world hydroelectricity
Australias theoretical hydro energy potential

(265TWh per year) is considered to be relatively
small, ranking 27th in the world (figure 8.5). High
rainfall variability, low average annual rainfall over
China
Total
United States
India
Asia
Brazil
Russian Federation
North America
229
Canada
South America
Indonesia
Gross theoretical
potential
Europe
Peru
Congo
Technically
feasible
Africa
Columbia
Economically
feasible
Oceania
Australia
AERA 8.4
10 000
20 000
30 000
AERA 8.5
1000
2000
3000
4000
5000
6000
7000
TWh/year
40 000
TWh/year
Figure 8.4 World hydroelectricity potential, by region
Figure 8.5 Gross theoretical hydroelectricity potential,

major countries
Source: Hydropower and Dams 2009
Source: Hydropower and Dams 2009
Table 8.1 Key hydro statistics

unit
Australia
200708
OECD
2008
World
2007
PJ
43.4
4654
11 084
Share of total
0.8
2.0
2.2
Average annual growth, from 2000
-4.2
-0.3
2.0
Electricity output
TWh
12
1293
3078
Share of total
4.5
12.2
15.6
GW
7.8
366.9
848.5
a Energy production and primary energy consumption are identical
Source: IEA 2009a; ABARE 2009a; Hydropower and Dams 2009
most of the continent, and high temperatures and

evaporation rates limit the availability of surface
water resources (WEC 2007).

Hydroelectricity generation has been growing globally,
reflecting its increasing popularity in developing
economies as a relatively cheap, simple and reliable
source of energy (figure 8.6).
Hydroelectricity generation accounted for 2.2 per cent
of total primary energy consumption in 2007 (table
8.1). World hydroelectricity consumption has grown at
an average annual rate of 2 per cent between 2000
and 2007. However, in the OECD, hydroelectricity
consumption has been declining at an average annual
rate of 0.3 per cent.
Consumption of hydroelectricity has also declined
in Australia due to the prolonged period of drought,
particularly in New South Wales and Victoria, that has
affected hydroelectricity generation.
Total installed hydroelectricity generation capacity is

currently around 849 GW, with around 158 GW of new
capacity under construction in late 2008 (Hydropower
and Dams 2009). Some 2530 GW of new large
scale hydro energy capacity were added in 2008,
mostly in China and India (Ren21 2009). China has
the worlds largest installed hydroelectricity capacity
with around 147 GW (17 per cent of world capacity),
followed by the United States, Brazil, Canada and the
Russian Federation. These economies account for
half of the worlds installed hydroelectricity generation
capacity. In 2008 there were around 200 large
(greater than 60 m high) dams with hydroelectricity
facilities under construction.
The total installed capacity of small hydro energy
is estimated to be about 85 GW worldwide (Ren21
2009). Most of this is in China where some 46 GW
per year have been added for the past several years,
but development of small hydro plants has also
occurred in other Asian countries.
In 2007, world production of hydroelectricity was
3078 TWh (around 11 000 PJ). The largest producers
were China, Brazil, Canada and the United States
(figure 8.7a). Australia ranked 31st in the world.
3500
28
3000
24
2500
20
2000
16
1500
12
1000
500
TWh
230
Hydroelectricity accounted for 16 per cent of world

electricity generation in 2007. Hydroelectricitys
share in total electricity generation has declined
from 22 per cent in 1971 to 16 per cent (figure 8.6),
because of the higher relative growth of electricity
generation from other sources. Latin American
countries account for the largest proportion of
hydroelectricity generation, followed by OECD North
America. The most rapid growth in hydroelectricity

generation has been in China, which is now the fourth
largest generator. Most African economies are also
in the process of developing hydro energy potential,
and have become a source of growth.
0
1971
1975
1980
1985
1990
1995
2000
2005
Year
Latin America
China
OECD Pacific
Middle East
Share of total
electricity generation (%)
OECD North America
Former Soviet Union
Africa
OECD Europe
Asia (ex China)
Non-OECD Europe
AERA 8.6
Figure 8.6 World hydro generation and share of total electricity generation
Source: IEA 2009a
Zambia in Africa; Bhutan, Kyrgyzstan, Laos, Nepal

and Tajikistan in Asia; Albania and Norway in Europe;
and Paraguay in South America (Hydropower and
Dams 2009).
China
Brazil
Canada
United States
Outlook for the world hydroelectricity market
Russian Federation
Norway
India
Venezuela
Japan
Sweden
Australia
0
100
200
300
400
500
600
TWh
The growth in hydroelectricity generation in the OECD

is expected to come from utilisation of remaining
undeveloped hydro energy resources. Growth is
also expected to occur in small (including mini and
micro) and medium scale hydroelectricity plants.
Improvements in technology may also improve the
reliability and efficiency and, hence, output of existing
hydroelectricity plants, as would refurbishment of
ageing infrastructure.
b) Share of total
China
Brazil
Canada
United States
Russian Federation
Norway
India
Venezuela
Japan
Sweden
Australia
AERA 8.7
20
40
In the IEA reference case projections, world

hydroelectricity generation is projected to increase
to 4680 TWh in 2030, at an average annual rate of
1.8per cent (table 8.2). Hydroelectricity generation is
projected to grow in the OECD at an average annual
rate of 0.7 per cent and in non-OECD countries by an
average annual rate of 2.5 per cent.
60
80
100
Figure 8.7 World electricity generation from hydro,

Source: IEA 2009a
Hydroelectricity accounted for a large share of total

electricity generation in some of these countries
including, most notably, Norway (98 per cent), Brazil
(84 per cent), Venezuela (72 per cent), Canada (58
per cent) and Sweden (44 per cent) (figure 8.7b).
Hydroelectricity meets over 90 per cent of domestic
electricity requirements in a number of other countries
including: the Democratic Republic of the Congo,
Ethiopia, Lesotho, Malawi, Mozambique, Namibia and
In non-OECD countries, growth is expected to

be underpinned by the cost competitiveness of
hydroelectricity compared with other means of
electricity generation. Much of the growth is expected
to be in small scale hydroelectricity, although there
are plans in many African countries to build large
scale hydroelectricity generation capacity. Growth is
also expected to occur in Asia, particularly China.
The implementation of global climate change
policies is likely to encourage the development
of hydroelectricity as a renewable, low emissions
energy source. In the IEAs 450 climate change
policy scenario, the share of hydro in world electricity
generation is projected to increase to 18.9 per cent
in 2030, compared with 13.6 per cent in its reference
case. For the OECD regions, under this scenario,
the share of hydro in total electricity generation
is projected to increase to 13.5 per cent in 2030
compared with 11.2 per cent in the reference case.
Table 8.2 IEA reference case projections for world hydroelectricity generation
unit
2007
2030
TWh
1258
1478
Share of total
12.2
11.2
Average annual growth, 20072030
0.7
TWh
1820
3202
Share of total
19.9
15.2
2.5
OECD
Non-OECD
World
TWh
3078
4680
Share of total
15.6
13.6
1.8
Source: IEA 2009b
231
8.3 Australias hydro energy

and Tasmania (29 per cent) (figure 8.9). The

Snowy Mountains Hydro-electric Scheme, with a
capacity of 3800 MW, accounts for around half of
Australias total hydroelectricity generation capacity
but considerably less of actual production. There
are also hydroelectricity schemes in north-east
Victoria, Queensland, Western Australia, and a minihydroelectricity project in South Australia. Pumped
storage accounts for about 1490 MW.
8.3.1 Hydro energy resources

Australia is the driest inhabited continent on earth,
with over 80 per cent of its landmass receiving an
annual average rainfall of less than 600 mm per
year and 50 per cent less than 300 mm per year
(figure 8.8). There is also high variability in rainfall,
evaporation rates and temperatures between
years, resulting in Australia having very limited and
variable surface water resources. Of Australias
gross theoretical hydro energy resource of 265
TWh per year, only around 60 TWh is considered
to be technically feasible (Hydropower and Dams
2009). Australias economically feasible capacity is
estimated at 30 TWh per year of which more than
60per cent has already been harnessed (Hydropower
and Dams 2009).
The Snowy Mountains Hydro-electric Scheme is

one of the most complex integrated water and
hydroelectricity schemes in the world. The Scheme
collects and stores the water that would normally
flow east to the coast and diverts it through transmountain tunnels and power stations. The water is
then released into the Murray and Murrumbidgee
Rivers for irrigation. The Snowy Mountains Scheme
comprises sixteen major dams, seven power stations
(two of which are underground), a pumping station,
145 km of inter-connected trans-mountain tunnels
and 80 km of aqueducts. The Snowy Mountains
Hydro-electric Scheme provides around 70 per cent
of all renewable energy that is available to the
eastern mainland grid of Australia, as well as
providing peak load power (Snowy Hydro 2007).
The first hydroelectric plant in Australia was built in

Launceston in 1895. Australia currently has 108
operating hydroelectric power stations with total
installed capacity of 7806 MW. These coincide
with the areas of highest rainfall and elevation
and are mostly in New South Wales (55 per cent)
120
110
130
140
150
232
Average Rainfall (mm)
10
DARWIN
1200
3200
0
100
800
2400
2000
600
500
1600
400
1200
20
1000
0
30
800
600
0
20
500
400
BRISBANE
300
200
0
30
PERTH
SYDNEY
ADELAIDE
750 km
MELBOURNE
40
HOBART
AERA 8.8
Figure 8.8 Average annual rainfall across Australia

Source: Bureau of Meteorology
The hydroelectricity generation system in Tasmania

comprises an integrated scheme of 28 power
stations, numerous lakes and over 50 large dams.
Hydro Tasmania, the owner of the majority of these
hydroelectricity plants, supplies both base load and
peak power to the National Electricity Market (NEM),
firstly to Tasmania and then the Australian network
through Basslink, the undersea interconnector which
runs under Bass Strait.
8.3.2 Hydroelectricity market

Australia has developed much of its large scale hydro
energy potential. Electricity generation from hydro
has declined in recent years because of an extended
period of drought in eastern Australia, where most
hydroelectricity capacity is located. Hydro energy
is becoming less significant in Australias fuel mix
for electricity generation, as growth in generation
capacity is being outpaced by other fuels.

As hydro energy resources are used to produce
electricity, which is used in either grid or off-grid
applications, hydro energy production is equivalent to
hydro energy consumption. Hydro accounted for 0.8
per cent of Australias primary energy consumption

in 200708. Hydroelectricity generation declined
at an average annual rate of 4.2 per cent between
19992000 and 200708, the result of a prolonged
period of drought.
In 200708, Australias hydroelectricity generation
was 12.1 TWh or 4.5 per cent of total electricity
generation (figure 8.10). Over the period 197778
to 200708, hydroelectricity generation has tended
to fluctuate, reflecting periods of below or above
average rainfall. However, the share of hydro in total
electricity generation has steadily declined over this
period reflecting the higher growth of alternative
forms of electricity generation.
Tasmania has always been the largest generator of
hydroelectricity in Australia, accounting for 57 per
cent of total generation in 200708 (figure 8.11).
New South Wales is the second largest, accounting
for 22 per cent of total electricity generation in
200708 (sourced mostly from the Snowy Mountains
Hydro-electric Scheme). Victoria, Queensland and
Western Australia account for the remainder.
233
Figure 8.9 Major Australian operating hydro electric facilities with capacity of greater than 10MW. Numbers indicate
sites referred to in section 8.4.2
20
20
15
15
10
10
TWh
a) State
0
1977-78
1982-83
1987-88
1992-93
1997-98
2002-03
Western Australia and

South Australia 0.4%
Tasmania
56.9%
Victoria
8.9%
Victoria
13.1%
0
2007-08
Year
Tasmania
28.7%
Electricity generation (TWh)

Share of total electricity generation (%)
New South Wales

and ACT 21.9%
AERA 8.10
New South Wales

and ACT 53.7%
Queensland
7.7%
Western
Australia
AERA 8.11
0.4%
Figure 8.10 Australias hydro generation and share of

total electricity generation
Figure 8.11 Australias hydro consumption by state,

200708
Source: ABARE 2009a
Source: ABARE 2009a

Queensland
8.3%
a) State
b) Size
Western Australia and

South Australia 0.4%
250-500
MW, 5
>500 MW, 3
100-250
MW, 8
Victoria
8.9%
234
Tasmania
28.7%
New South Wales

and ACT 53.7%
50-100
MW, 16
<10 MW, 60
10-50
MW, 20
AERA 8.12
Queensland
8.3%
Figure 8.12 Installed hydro capacity by state and size, 2009

b) Size
250-500
MW, 5
>500 MW, 3
Installed
100-250electricity generation capacity
MW, 8
Australia
has only 3 hydroelectricity plants with
a capacity of 500 MW or more, all of which are located
in the Snowy Mountains Hydro-electric Scheme (figure
8.12). The largest hydroelectricity plant in Australia
50-100
has a capacity
of 1500 MW, which is mid-sized by
MW, 16
international standards. More than 75 per cent
<10 MW,
60
of Australias installed hydroelectricity
capacity
is
contained in 16 hydroelectricity plants with a capacity
10-50 At the other end of the scale,
of 100 MW or more.
MW, 20
AERA 8.12
there are some 60 small and mini-hydroelectricity

plants (less than 10 MW capacity) with a combined
capacity of just over 150 MW.
However, installed hydroelectricity generation capacity
does not directly reflect actual electricity generation.
The smaller installed capacity in Tasmania produces
more than double the output of the Snowy Mountains
Hydro-electric Scheme. Tasmania is the only state
that uses hydroelectricity as the main means of
electricity generation.

Australias hydro energy
Although benefiting from the Renewable Energy
Target and increased demand for renewable energy,
growth in Australias hydroelectricity generation
is expected to be limited and outpaced by other
renewables, especially wind energy. Future growth in
hydroelectricity generation capacity is likely to come
mainly from the installation of small scale plants.
Water availability will be a key constraint on the future
expansion of hydroelectricity in Australia.

Opportunities for further hydroelectricity generation in
Australia are offered by refurbishment and efficiency
improvements at existing hydroelectricity plants, and
continued growth of small-scale hydroelectricity plants
connected to the grid. Hydroelectricity generation is
a low-emissions technology, but future growth will be
constrained by water availability and competition for
scarce water resources.
Hydroelectricity is a mature renewable

electricity generation technology with limited
scope for further large scale development
in Australia
Most of Australias best large scale hydro energy
sites have already been developed or, in some
cases, are not available for future development
because of environmental considerations. There is
some potential for additional hydro energy generation
using the major rivers of northern Australia but
this is limited by the regions remoteness from

infrastructure and markets and the seasonal flows
of the rivers.
Upgrading and refurbishing ageing hydro

infrastructure in Australia will result in
capacity and efficiency gains
Many of Australias hydroelectric power stations
are now more than 50 years old and will require
refurbishment in the near future. This will involve
significant expenditure on infrastructure, including
the replacement and repair of equipment. The
refurbishment of plants will increase the efficiency
and decrease the environmental impacts of
hydroelectricity. Further technology developments
will be focused on efficiency improvements and
cost reductions in both new and existing plants
(box 8.2).
The Snowy Hydro Scheme is currently undergoing
a maintenance and refurbishment process, at a
cost of approximately A$300 million (in real
terms) over seven years (Snowy Hydro 2009).
The modernisation will include the replacement of
ageing and high maintenance equipment, increasing
the efficiency and capacity of turbines, and ensuring
the continued reliable operation of the component
systems of the scheme.
Refurbishment of the power station at Lake Margaret,
Tasmania one of Australias oldest hydroelectricity
facilities (commissioned in 1914) also commenced
in 2008. The main objective of the project is to repair
the original wooden pipeline, which has deteriorated
Box 8.2 Hydroelectricity costs
Hydroelectricity generation costs

The most significant cost in developing a hydro
resource is the construction of the necessary
infrastructure. Infrastructure costs include the dams
as well as the power plant itself. Building the plant
on an existing dam will significantly reduce capital
outlays. Costs incurred in the development phase of
a hydro facility include (Forouzbakhsh et. al. 2007):
Civil costs construction of the components
of the project including dams, headponds, and
access roads.
Electro mechanical equipment costs the
machinery of the facility, including turbines,
generators and control systems.
Power transmission line costs installation of
the transmission lines.
Indirect costs include engineering, design,
supervision, administration and inflation impacts on
costs during the construction period. Construction
of small and medium plants can take between 1 to
6 years, while for large scale plants it can take up

to 30 years (for example, the Snowy Hydro Scheme
took 25 years to build).
The costs of building Australian hydroelectricity
generation plants have been varied. The Snowy
Hydro scheme, Australias largest hydroelectricity
scheme, was constructed over a period of 25
years at a cost of A$820 million (Snowy Hydro
2007). Australias most recent major hydroelectric
development, the Bogong project (site 1, figure
8.9), commenced construction in 2006 and was
commissioned in late 2009 at a cost of around
$234 million. The project which includes the
140 MW Bogong power station, a 6.9 km tunnel,
head works and a 220 kV transmission line will
provide fast peaking power. In comparison, the Ord
River hydroelectricity scheme, which was built on the
existing dam which created Lake Argyle in Western
Australia, was constructed at a cost of A$75 million
(Pacific Hydro 2009). While this plant is relatively small
235
(30 MW), it demonstrates the potential reduction

in construction costs where an existing dam can
be used.
While hydroelectricity has high construction and
infrastructure costs, it has a low cost of operation
compared to most other means of electricity
generation. In the OECD, capital costs of hydroelectric
plants are estimated at US$2400 per kW, and
operating costs are estimated at between US$0.03
and US$0.04 per kWh (IEA 2008). For non-OECD
(Hydro Tasmania 2008). Additional maintenance on

the dam, minor upgrade of the machines, as well
as replacement of a transformer, will also occur
before the planned restoration of operations. This
upgrade will cost about $14.7 million to gain 8.4MW
of capacity at a capital spend rate of $1.75 million
per MW, considerably less than the costs of new
plant. However, the plant will require additional
maintenance and repairs over the coming years.
Small scale hydro developments are likely

to be an important source of future growth
in Australia
236
With the exception of the Bogong project (see

Proposed development projects in section 8.4.2),
most hydroelectricity plants installed in Australia
in recent years have been mini hydro schemes.
These plants have the advantage of lower water
requirements and a smaller environmental impact
than larger schemes, especially those with large
storage dams.
Although most of Australias most favourable
hydroelectricity sites have been developed, mini
hydroelectricity plants are potentially viable on
smaller rivers and streams where large dams are
not technically feasible or environmentally acceptable.
They can also be retro-fitted to existing water storages.
At present mini hydro plants account for only around
2 per cent of installed hydro capacity. Research,
development and demonstration activity is likely to
increase the cost competitiveness of small scale
hydro schemes in the future (box 8.3).
Surface water availability and competition

for scarce water resources will be a key
constraint to future hydro developments
in Australia
Australia has a high variability of rainfall across
the continent (figure 8.8). This means that annual
inflows to storages can vary by up to 50 per cent
and seasonal variations can be extreme. Ongoing
drought in much of south eastern Australia has seen
a substantial decline in water levels in the major
storages in New South Wales (notably the Snowy
Mountains scheme), Victoria and Tasmania and
declining capacity factors for hydroelectricity stations.
Water levels in storages across Australia have declined
countries, capital costs are often below US$1000

per kW. The operating costs of small hydroelectricity
facilities are estimated at between US$0.02 and
US$0.06 per kWh. Operating and capital costs
depend on the size and type (for example, run-of-river)
of plant, and whether it includes pumped storage
capabilities. Most hydroelectric plants have a lifetime
of over 50 years, during which minimal maintenance
or refurbishment is required, so the relatively high
capital costs are amortised over a long period.
to an average of below 50 per cent of capacity

(National Water Commission 2007). Cloud seeding
has been used in the Snowy Mountains and in
Tasmania to augment water supplies.
Climate change models suggest the outlook for south
eastern Australia is for drier conditions with reduced
rainfall and higher evaporation, and a higher frequency
of large storms (BOM 2009; IPPC 2007; Bates et
al. 2008). Reduced precipitation and increased
evaporation are projected to intensify by 2030,
leading to water security problems in southern and
eastern Australia in particular (Hennessy et al. 2007).
The climate change projections further exacerbate
the problem of Australias dry climate with low and
variable rainfall, low run off and unreliable water
flows and mean that there is only limited potential
for further major hydro development in mainland
Australia. Some of this potential is located in the
rivers in northern Australia, but this is limited by the
inconsistency of water flows in this region (periods of
low rainfall along with periods of flooding).
Competition for water resources will also affect the
availability of water for hydroelectricity generation.
Demand for water for urban and agricultural uses
is projected to increase. It is likely that these uses
for scarce water resources will take precedence
over hydroelectricity generation. Generators
face increasing demands to balance their needs
against the need for greater water security for
cities and major inland towns. The maintenance of
environmental flows to ensure the environmental
sustainability of river systems below dams is also
an important future consideration which may further
constrain growth of hydroelectricity generation.
Water policies may also play a role in the future
development of hydroelectricity in Australia. Policies
that limit the availability of water to hydroelectricity
generators, restrict the flow of water into dams, require
generators to let water out of dams, or prioritise the
use of water for agriculture could change the viability of
many hydroelectric generators, and limit future growth.
The extended drought in much of Australia has led to
water restrictions being put into place in most capital
cities, and regulation of the Murray-Darling basin river
systems has strengthened.
Box 8.3 Technology developments in hydroelectricity

Research is being undertaken to improve
efficiency, reduce costs, and to improve the
reliability of hydroelectricity generation. There
are different research needs for small and large
scale hydro (table 8.3). Small hydropower plants,
including micro and pico plants, are increasingly
seen as a viable source of power because of their
lower development costs and water requirements,
and their lower environmental footprint. Small scale
hydropower plants require special technologies
to increase the efficiency of electricity generation
and thereby minimise both the operating costs
and environmental impacts of hydroelectricity
generation (ESHA 2006).
water. The introduction of greaseless bearings in the

turbines would reduce the risk of petroleum products
entering the water, and is also currently being
investigated (EERE 2005).
Table 8.3 Technology improvements for hydropower
The environmental impacts of hydroelectricity

are also being investigated, and ways to mitigate
these impacts developed. This includes the
development of new and improved turbines
designed to minimise the impact on fish and other
aquatic life and to increase dissolved oxygen in the
16
14
12
10
TWh
18
0
2003-04
2005-06
2007-08
2029-30
Year
(TWh)

generation (%)
AERA 8.2
Figure 8.13 Australias hydroelectricity generation to

202930
Operation and maintenance

Increasing use of
maintenance-free
and remote operation
technologies
Operation and maintenance

Develop package plants
requiring only limited
operation and maintenance
energy consumption (figure 8.13). The potential for

return of hydroelectricity output to pre-2006 levels
will be strongly influenced by climate and by water
availability.
In ABAREs latest long-term energy projections that

include the Renewable Energy Target, a 5 per cent
policies (ABARE 2010), hydroelectricity generation is
projected to increase only slightly between 200708
and 202930, representing an average annual growth
rate of 0.2 per cent. In 202930, hydro is projected
to account for 3.5 per cent of Australias total
electricity generation, and 0.6 per cent of primary
2001-02
Equipment
Turbines with less impact
on fish populations
Low-head turbines
In-stream flow technologies
Source: IEA 2008
Hydroelectricity is projected to continue to be an

important source of renewable energy in Australia
over the outlook period.
1999-00
Small hydro
Equipment
Low-head technologies,
including in-stream flow
Communicate advances
in equipment, devices and
materials
Hybrid systems
Wind-hydro systems
Hydrogen-assisted hydro
systems
8.4.2 Outlook for hydroelectricity market
Large Hydro

Based on Hydropower and Dams (2009), there
are several current hydro project developments
in Australia:
A 20 MW hydro plant is currently under
construction at the Dartmouth regulating dam
in Victoria (Site 2, figure 8.9).
The next stage of redevelopment of the 8.4 MW
Lake Margaret power station in Tasmania has
been approved by the board of Hydro Tasmania
(Site 3, figure 8.9).
Hydro Tasmania Consulting has been awarded a
contract to supply and construct six mini hydro
plants for Melbourne Water with a total capacity
of 7 MW, producing up to 40 GWh per year.
8.5 References
August
ABARE, 2009b, Major electricity development projects
October listing, Canberra, November
Geoscience Australia, 2009, map of operating renewable
energy generators in Australia, Canberra
237
Bates BC, Kundzewicz ZW, Wu S & Palutikof JP (eds), 2008,

Climate change and water, IPCC Technical Paper VI, IPCC
Secretariat, Geneva, <http://www.ipcc.ch/publications_
and_data/publications_and_data_technical_papers_climate_
change_and_water.htm>
IEA (International Energy Agency), 2008, Energy

technology perspectives: scenarios and strategies to
2050, OECD, Paris
Bureau of Meteorology (BOM), 2009, The Greenhouse Effect

and Climate Change, BOM, Melbourne, <http://www.bom.
gov.au/info/GreenhouseEffectAndClimateChange.pdf>
IEA, 2009b, World Energy Outlook 2009, 2009 edition,

OECD, Paris
EERE, 2005, Hydropower research and development, Energy

Efficiency and Renewable Energy, US Department of Energy,
Washington, August
Egre D & Milewski J, 2002, The diversity of hydropower
projects, Energy Policy, vol. 30, pp. 12251230
IEA, 2009, World Energy Outlook, OECD, Paris

Intergovernmental Panel on Climate Change (IPCC),
2007, IPCC Fourth Assessment Report: Climate Change
2007 (AR4), Geneva, <http://www.ipcc.ch/publications_
and_data/publications_and_data_reports.htm>
ESHA, 2006, State of the Art of Small Hydropower in EU-25,

European Small Hydropower Association, Belgium
National Water Commission, 2007, A baseline

assessment of water resources for the National Water
Initiative Level 2 Assessment, Canberra, May
Forouzbakhsh F, Hosseini SMH & Vakilian M, 2007, An

approach to the investment analysis of small and medium
hydro-power plants, Energy Policy, vol. 35, pp. 10131024,
Elsevier, Amsterdam
Pacific Hydro, 2009, Ord River Hydro factsheet,

Melbourne, <http://www.pacifichydro.com.au/en-us/ourprojects/australia--pacific/ord-river-hydro-project.aspx>
Hennessy K, Fitzharris B, Bates BC, Harvey N, Howden

SM, Hughes L, Salinger J & Warrick, R, 2007, Australia and
New Zealand. Climate Change 2007: Impacts, Adaptation
and Vulnerability. Contribution of Working Group II to the
Fourth Assessment Report of the Intergovernmental Panel
on Climate Change, ML Parry, OF Canziani, JP Palutikof, PJ
van der Linden and CE Hanson eds., Cambridge University
Press, Cambridge, UK, 507-540
Ren21, 2009, Renewables global status report, 2009

update, Renewable Energy Policy Network for the 21st
Century, Paris
Hydropower and Dams, 2009, World Atlas 2008,

The International Journal on Hydropower & Dams,
Aqua~Media International, Surrey
238
IEA, 2009a, World Energy Balances, 2009 edition,

OECD, Paris
Hydro Tasmania, 2008, Lake Margaret Power Scheme,

Hobart, <http://www.hydro.com.au/documents/Energy/
Lake_Margaret_FAQ_200811.pdf>
Paish O, 2002, Small hydro power: technology and

current status. Renewable and Sustainable Energy
Reviews, vol. 6, pp. 537556, Elsevier, Amsterdam
Snowy Hydro, 2007, Snowy Mountains Scheme,

Sydney, <http://www.snowyhydro.com.au/levelTwo.
asp?pageID=66&parentID=4>
Snowy Hydro, 2009, Scheme Modernisation Project,
Sydney, <http://www.snowyhydro.com.au/levelTwo.
asp?pageID=340&parentID=4>
Resources 2007, London, September
Chapter 9
Wind Energy
9.1 Summary
Key messages

Wind resources are a substantial source of low to zero-emission renewable energy, with a proven
technology. Wind farms with installed capacities of more 100 megawatts (MW) are now common.
Australia has some of the worlds best wind resources along its south-western, southern and southeastern margins. More isolated areas of the eastern margin also have excellent wind resources.
Wind energy is the fastest growing renewable energy source for electricity generation, although its
current share of total primary energy consumption is only 0.2 per cent in Australia.
Further rapid growth in wind energy in Australia will be encouraged by government policies, notably
the Renewable Energy Target (RET) and emissions reduction targets, increased demand for low
emission renewable energy and lower manufacturing costs.
In Australia, the share of wind energy in total electricity generation is projected to increase from
1.5 per cent in 200708 to 12.1 per cent in 202930.
Extension and other augmentation of the electricity transmission network may be required to
access dispersed (remote) wind energy resources and to integrate the projected increase in wind
energy electricity generation.
9.1.1 World wind energy resources

and market
The worlds wind energy resource is estimated
to be around one million gigawatts (GW) for total
land coverage. The windiest areas are typically
coastal regions of continents at mid to high
latitudes, and mountainous regions.
Wind electricity generation is the fastest growing
energy source, increasing at an average annual rate
of nearly 30 per cent between 2000 and 2008.
The major wind energy producers are Germany, the
United States, Spain, India and China.
The world outlook for electricity generation
from wind energy will be strongly influenced by
government climate change policies and the
demand for low-emission renewable energy at
affordable prices.
The IEA projects the share of wind energy in total
electricity generation will increase markedly from
0.9 per cent in 2007 to 4.5 per cent in 2030
from 1.4 per cent to 8.1 per cent in OECD
countries and from 0.3 per cent to 2.2 per cent
in non-OECD countries.
9.1.2 Australias wind energy resources

Australia has some of the best wind resources
in the world, primarily located in western, southwestern, southern and south-eastern coastal
regions but extending hundreds of kilometres

inland and including highland areas in southeastern Australia (figure 9.1). There are large
areas with average wind speeds suitable for high
yield electricity generation.
Local topography and other variability in the local
terrain such as surface roughness exert a major
influence on wind speed and wind variability.
This necessitates detailed local investigation of
potential sites for wind farms.

wind energy resources
Government policies, particularly carbon
emissions reduction targets and the Renewable
Energy Target (RET), are expected to underpin
the future growth of Australias wind energy
industry. The operation of wind turbines produces
no greenhouse gas emissions, and emissions
involved in the development stage are low
compared with electricity generation from
other sources.
Wind energy is a proven and mature technology
with low operating costs. Both the size of turbines
and wind farms have increased, with farms of
more than 100 MW combined capacity now
common and substantially larger wind farms
proposed.
239
240
Figure 9.1 Australias wind resources

Source: Windlab Systems Pty Ltd, DEWHA Renewable Energy Atlas (wind map data); Geoscience Australia
Grid constraints lack of capacity or availability

may limit further growth of wind energy in
some areas with good wind resources,
particularly in South Australia. In such areas,
upgrades and extensions to the current grid may
be needed to accommodate significant further
wind energy development. Elsewhere, current
grid infrastructure should be adequate for
the levels of wind energy penetration projected
for 2030.
Variability imposes an upper limit on wind energy

penetration, however this is not likely to be
reached at the level of wind energy projected to
2030. This limit can be extended by better wind
forecasting (allowing the grid to react to projected
changes in wind conditions), demand side
management (shedding or adding load to match
wind conditions) and even the addition of storage
nodes into the grid (moving excess wind energy to
higher demand periods).
9.1.4 Australias wind energy market
Wind turbine manufacturing output is doubling

every three years. There is also a shift from
European and United States production to lower

cost manufacturing centres in India and China.
Both of these trends will result in a reduction
in turbine costs.
Access to Australias onshore wind resources

is likely to be sufficient to meet industry
development requirements over the outlook
period. There are currently no plans to develop
higher cost offshore wind resources.
In 200708, Australias wind energy use

represented only 0.2 per cent of total primary
energy consumption and 1.5 per cent of total
electricity generation. However, wind energy is
the fastest growing energy source in Australia
with an average annual growth of 69.5 per cent
since 199900.
In October 2009, there were 85 wind farms in
Australia with a combined installed capacity of
1.7 GW. These power stations are mainly located
in South Australia (48 per cent), Victoria (23 per
C H A P T E R 9 : WIND ENER GY
15
40
12
30
20
10
Rotor blade
%
TWh
50
Nacelle
Rotor hub
0
1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2002900
01
02
03
04
05
06
07
08
30
Year
(TWh)
Share of total
(%)
Tower
AERA 9.2
Figure 9.2 Australias wind energy market to 202930

Source: ABARE 2010
cent) and Western Australia (12 per cent).

A further 11.3 GW of wind energy capacity has
been proposed for development in Australia.
In the latest ABARE long-term energy projections

that include a 5 per cent emissions reduction
target, wind electricity generation in Australia
is projected to increase sharply from 4 TWh in
200708 to 44 TWh in 202930 (figure 9.2). The
share of wind energy in total electricity generation
is projected to increase from 1.5 per cent in
200708 to 12.1 per cent in 202930.

and world market
9.2.1 Definitions
Wind is a vast potential source of renewable energy.
Winds are generated by complex mechanisms involving
the rotation of the Earth, the heat capacity of the Sun,
the cooling effect of the oceans and polar ice caps,
temperature gradients between land and sea, and the
physical effects of mountains and other obstacles.
Wind energy is generated by converting wind currents
into other forms of energy using wind turbines (figure
9.3). Turbines extract energy from the passing air by
converting kinetic energy from rotational movement
via a rotor. The effectiveness of this conversion at
any given site is commonly measured by its energy
density or, alternatively, as a capacity factor (box
9.1). Wind energy is primarily used for electricity
generation, both onsite and for transport to the
grid. Wind energy is also used to pump bore water,
particularly in rural areas.
9.2.2 Wind energy supply chain

The wind energy supply chain is relatively simple
(figure 9.4). In the energy market, wind resources are
utilised for electricity generation, either linked to the
grid or for off-grid applications in remote areas. Wind
Figure 9.3 A modern wind turbine

Source: Wikimedia Commons
Box 9.1 Capacity factor

Estimates of electricity generation are generally
calculated by modelling the interaction between
the wind distribution and a particular turbine.
The ratio of actual yield to the maximum output
of the machine is commonly referred to as
a capacity factor. Each type of turbine has a
different capacity factor for any given site.
For example, a wind turbine with a 1 MW capacity
and 30 per cent capacity factor will not produce
its theoretical maximum annual production of
8760 MWh (1MW * 24 hours * 365 days). Rather
it is expected to produce 2628 MWh (1MW * 24
hours * 365 days * 0.3 capacity factor).
The capacity factor should not be confused
with efficiency which is a measure comparing
the actual output with the energy contained in
the passing wind. Wind turbines are limited by
physical factors to an efficiency of about 60 per
cent (Betzs Law). The best wind turbines are
presently around 44 per cent efficient.
resources are also used to pump water, especially in
rural Australia.
Modern wind energy prospecting typically uses three
levels of wind resource mapping:
1. regional-scale mesoscale wind speed maps,
to identify favourable regions. These maps are
241
Development and
Production
Storage
End Use Market
Development
decision
Industry
Project
Wind farm
Domestic
market
Electricity
Generation
Resource
potential
Commercial
Residential
AERA 9.4
Figure 9.4 Australias wind energy supply chain

compiled using wind measurements from balloons

combined with atmospheric models;
2. farm level microscale wind resource mapping to
account for local variations in wind speed; and
242
3. micro-siting studies to determine optimal

locations for siting of individual turbines. This
mapping requires input from long term sensors
installed on the site.
Final siting of wind farms depends on both technical
and commercial factors, including wind speed and
topography, as well as proximity to transmission
lines, access to land, transport access, local
development zoning and development guidelines,
and proximity to markets.
In the electricity market, wind energy is automatically
dispatched, meaning that the wind electricity must
be consumed before other, more controllable,
sources are dispatched. Since March 2009 new wind
generators greater than 30 MW must be classified
as semi-scheduled and participate in the central
despatch process (AER 2009).
Electricity produced from the individual turbines
is stepped up by means of a transformer and
high voltage switch and collected in the central
switchyard of the wind farm. It is then fed to the
electricity transmission grid substation with further
transformers and switchgear. The electricity is
distributed to the industrial, commercial and
residential markets in the same manner as electricity
generated from any other source.
Small wind turbines (typically less than 10 kW) are
commonly used in remote locations isolated from
the grid for a variety of industrial, commercial and
household needs, usually in conjunction with some

form of storage.
9.2.3 World wind energy market

The wind energy industry is the fastest growing
renewable energy source in many countries and
is expected to continue to grow rapidly over the
period to 2030. Production of wind energy is largely
concentrated in Europe and the United States.
However, there has also been rapid growth in the
wind energy industries in China and India.
Resources
The worlds wind energy resource is estimated to
be about one million GW for total land coverage.
Assuming only 1 per cent of the area is utilised and
allowance is made for the lower load factors of wind
plant, the wind energy potential would correspond to
around the world total electricity generation capacity
(WEC 2007).
The windiest areas are typically coastal regions
of continents at mid-to high latitudes and in
mountainous regions. Locations with the highest
wind energy potential include the westerly wind belts
between latitudes 35 and 50. This includes the
coastal regions of western and southern Australia,
New Zealand, southern South America, and South
Africa in the southern hemisphere, and northern and
western Europe, and the north eastern and western
coasts of Canada and the United States. These
regions are generally characterised by high, relatively
constant wind conditions, with average wind speeds
in excess of 6 metres per second (m/s) and, in
places, more than 9 m/s.
Regions with high wind energy potential are
characterised by:
Table 9.1 Key wind energy statistics, 2008

unit
Australia
200708
OECD
2008
World
2008a
Primary energy consumptionb
PJ
14.2
660.2
767.8
Share of total
0.2
0.3
0.1c
69.5
26.2
27.7
TWh
3.9
183.4
213.3
1.5
1.7
0.9c
GW
1.3
104.3
120.8
Electricity output
Share of total
a ABARE estimate b Energy production and primary energy consumption are identical c 2007 data
Source: ABARE 2009a; IEA 2009a; GWEC 2009a
proximity to a major energy consumption region

(i.e. urban/industrial areas); and
smooth landscape, which increases wind speeds,
and reduces the mechanical stress on wind
turbine components that results from variable and
turbulent wind conditions associated with rough
landscape.
Because of wind variability, the energy density
at a potential site commonly described as its
capacity factor (box 9.1) is generally in the range
of 2040 per cent. While the majority of areas in
locations convenient for electricity transfer to the
grid are located onshore, offshore sites have also
been identified as having significant potential for
wind energy, both to take advantage of increased
wind speeds and to increase the number of available
sites. Offshore locations also help reduce turbulence
and hence stress on machine components. There
have been wind turbines deployed in shallow seas off
northern Europe for more than a decade. Offshore
sites are expected to make an increasingly significant
contribution to electricity generation in some countries,
notably in Europe, where there are increasing
difficulties in gaining access to onshore sites.

In the wind energy market, energy production,
primary energy consumption and fuel inputs to
electricity generation are the same as there is
essentially no international trade and no ability
to hold stocks of wind energy. Wind energy has
increased from a 0.03 per cent share of global
primary energy consumption in 2000 to around
0.1 per cent in 2007 (IEA 2009a).
Wind energy use is growing rapidly in the industrialised

world: capacity has been doubling about every three
and half years since the early 1990s. The reasons for
this rapid growth are environmental; it is a renewable
and low emission source of energy. Because of the
simplicity of its technology and resource abundance,
it has emerged as one of the leading renewable energy
industries, well aligned with governments search
for commercially-viable renewable energy sources.
There is also increasing interest in the developing
world because it can be readily installed to meet local
electricity needs.
The wind energy market is dominated by two regions:
Europe and North America (figure 9.5). In 2007, 61
per cent of the worlds wind electricity generation was
200
1.0
180
160
0.9
0.8
140
0.7
120
0.6
100
80
0.5
0.4
60
0.3
40
20
0.2
0.1
winds that are either constant or coinciding with

peak energy consumption periods (during the day
or evening);
electricity generation in 2007 and 1.7 per cent of

OECD electricity generation in 2008. Global wind
electricity generation has increased strongly, from
31 terawatt-hours (TWh) in 2000 to 213 TWh in
2008, representing an average annual growth rate
of nearly 28 per cent (table 9.1).
TWh
high average wind speeds;
0
1990 1992 1994 1996 1998 2000 2002 2004 2006
Year
Rest of the world
OECD Europe
OECD North
America
Wind share of electricity

generation (%)
AERA 9.5
Figure 9.5 World wind electricity generation, by region
Wind energy accounted for 0.9 per cent of world
Source: IEA 2009a
243
in OECD Europe and 22 per cent was in OECD North

America, mainly in the United States.
The main wind energy producers in Europe are
Germany (23 per cent of world wind electricity
generation in 2007), Spain (16 per cent) and Denmark
(4 per cent) (figure 9.6a). While growth in wind
electricity generation in these countries has slowed
in recent years, other major producers have emerged,
including the United Kingdom, France and Italy. The
strong presence of the wind energy industry in the
European Union, where it is the fastest growing energy
source, is largely the result of government initiatives
to have renewable energy sources provide 21 per cent
of electricity generation by 2010 (Commission of the
European Communities 2005).
The United States produced 35 TWh of wind energy
in 2007, accounting for 20 per cent of world wind
energy production. Currently, the strongest legislative
support for the wind energy industry is a 2.1 cents
per kWh tax credit allowed for the production of
electricity from utility scale wind turbines (the Wind
Energy Production Tax Credit). In addition, renewable
portfolio standard (RPS) policies with targets for a
renewable share of electricity generation have been
implemented in 28 US states. A proposed national
RPS, which would be similar to Australias Renewable
Energy Target, is before the United States Congress.
244
In Asia, India (with 7 per cent of world wind electricity

generation in 2007) and China (5 per cent) have
emerged as significant wind energy producers. India
has supported the development of the wind energy
industry through research and development support,
demonstration projects and policy support. Chinas
National Energy Bureau identified wind energy as a
priority for diversifying Chinas energy mix away from
coal. Both countries are now manufacturers and
exporters of wind turbines.
a) Electricity generation
Germany
United States
Spain
India
China
Denmark
United Kingdom
France
Portugal
Italy
Australia
0
40
50
b) Share of electricity generation

United States
Spain
India
China
Denmark
United Kingdom
France
Portugal
Italy
Australia
AERA 9.6
10
15
20
Figure 9.6 Wind electricity generation, major countries,

2007
Source: IEA 2009a
Table 9.2 Installed capacity in major wind electricity

generating countries, 2008
Australia is the fourteenth largest wind producer

in the world (figure 9.6a). However, wind energy
accounted for only 1.5 per cent of Australias total
electricity generation in 200708 (table 9.1).
At the end of 2008 the United States had the

highest installed capacity (25 GW) followed by
Germany (24 GW), Spain (17 GW), China (12 GW)
30
Germany
Country
Global installed wind energy capacity has risen

sharply from 6.1 GW in 1996 to 121.5 GW in 2008
(table 9.2). In 2008, 27 GW of new capacity was
installed, an annual increase of 29 per cent, with
more than half of the new capacity developed in the
United States and China.
20
TWh
Wind energy contributes a significant proportion of

electricity in some countries, particularly Denmark
(19 per cent in 2007), Portugal (13 per cent), Spain
(10 per cent) and Germany (6 per cent) (figure 9.6b).
Installed electricity generation capacity
10
Installed
capacity
GW
Share of world
%
1. United States
25.2
21
2. Germany
23.9
20
3. Spain
16.8
14
4. China
12.2
10
5. India
9.6
6. Italy
3.7
7. France
3.4
8. United Kingdom
3.2
9. Denmark
3.2
10. Portugal
2.9
14. Australia
1.3
121.5
100
World
Source: GWEC 2009
and India (10 GW). Together these five countries

accounted for more than 72 per cent of global
installed capacity. The fastest growing region since
2006 has been Asia, accounting for nearly one third
of newly installed wind capacity in 2008 (but only
12 per cent of production in 2007).
energy in total electricity generation is projected

to rise from 1.4percent in 2007 to 8.1 per cent
in 2030. Wind energy use is also projected to rise
strongly in non-OECD countries by 2030, non-OECD
countries are projected to account for 30 per cent of
world wind electricity generation (figure 9.7).
World wind energy market outlook
In the IEAs 450 ppm climate change policy scenario

(stabilising the concentration of atmospheric
greenhouse gases at 450 parts per million), the
economic incentives to invest in clean renewable
energy sources are considerably greater than those
of the reference case. As a result, the share of wind
energy in world electricity generation is projected to
increase to 9.3 per cent in 2030 (more than double
the share in the reference case). In the OECD region,
the wind energy share is projected to increase to
12.8 per cent in 2030 under this scenario.
Government policies will be a major contributing

factor to the future development of the industry.
Renewable energy targets, for example, provide
economic incentives to invest in least cost sources
of renewable energy resources. Wind energy is likely
to become more important in the fuel mix, because
wind energy technologies have been demonstrated
to be commercially viable and there is still significant
development potential for wind resources.
The rapid improvement in wind turbine efficiency and
grid integration technology over the past decade is
expected to continue, adding to the overall efficiency
of the industry. Reducing the cost of wind energy
generation, through lower manufacturing costs and
economic gains from larger operations, may also
enhance the competitiveness of the industry.
According to the IEA (2009b), the global wind energy
industry is projected to continue to grow strongly
throughout the period to 2030, increasing its share
of electricity generation in many countries. In the
IEA reference case projections, world electricity
generation from wind energy is projected to increase
at an average annual rate of 9.9 per cent between
2007 and 2030 (table 9.3). As a result, the share of
wind energy in total electricity generation is projected
to increase sharply from 0.9 per cent in 2007 to 4.5
per cent in 2030.
OECD countries are expected to continue to be
the main wind energy producers over the outlook
period. In the OECD region, the share of wind
a) 2007
Non-OECD
14%
OECD
86%
245
b) 2030

electricity generation from wind energy
unit
2007
2030
TWh
150
1068
Share of total
1.4
8.1
Average annual growth,

20072030
8.9
OECD
Non-OECD
TWh
24
468
Share of total
0.3
2.2

20072030
13.8
TWh
173
1535
Share of total
0.9
4.5

20072030
9.9
World
Source: IEA 2009b
Non-OECD
30%
OECD
70%
AERA 9.7
Figure 9.7 IEA reference case projections for wind

energy in the OECD and non-OECD regions, 2007 and
2030
Source: IEA 2009b
9.3 Australias wind energy

9.3.1 Wind energy resources
Australia has some of the best wind resources
in the world. Australias wind energy resources
are located mainly in the southern parts of the
continent (which lie in the path of the westerly
wind flow known as the roaring 40s) and reach a
maximum around Bass Strait (figure 9.8). The largest
wind resource is generated by the passage of low
pressure and associated frontal systems whose
northerly extent and influence depends on the size
of the frontal system. Winds in northern Australia
are predominantly generated by the monsoon and
trade wind systems. Large-scale topography such as
the Great Dividing Range in eastern Australia exert
significant steering effects on the winds, channelling
them through major valleys or deflecting or blocking
them from other areas (Coppin et al. 2003).
Deflection of weaker fronts from frontal refraction
around the ranges of the Divide in south eastern
Australia creates winds with a southerly component
(southerly busters) along the east coast.
In addition to the refractions by topography and heat

lows over northern Australia, other major factors
influencing wind resources are seasonal and diurnal
variation in wind speed. Winds are strongest in winter
and spring in western and southern Australia but
the monthly behaviour differs from region to region.
Variations in average monthly wind speed of up to
1520 per cent over the long term annual average
are not uncommon. There may be similar daily
variations at individual locations, with increased wind
speeds in the afternoon (Coppin et al. 2003).
Meso-scale maps show that Australias greatest
wind potential lies in the coastal regions of western,
south-western, southern and south-eastern Australia
(areas shown in orange to red colours in figure
9.8 where average wind speeds typically exceed
6.5m/s). Coastal regions with high wind resources
(wind speeds above 7.5 m/s) include the west
coast south of Shark Bay to Cape Leeuwin, along
the Great Australian Bight and the Eyre Peninsula
in South Australia, to western Victoria and the west
coast of Tasmania (figure 9.8). Good wind resources
extend hundreds of kilometres inland and many of
Australias wind farms (current and planned) are
located some distance from the coast. Inland regions
246
Figure 9.8 Predicted average wind speed at a height of 80 metres

The Victorian Wind Atlas (Sustainable Energy Authority

Victoria 2003), shows a modelled average wind speed
of 6.5 m/s across the state with the highest average
wind speeds (> 7 m/s) found in coastal, central and
alpine regions of Victoria (figure 9.8). The atlas
also presents modelled average wind speed data
in relation to land title (national parks, other public
land and freehold land), land use and proximity to
the electricity network. Effective wind resources
are defined as those located within a commercially
viable distance from the electricity network. The atlas
delineates corridors within 10 and 30 km of the
network. It presents wind resource maps for each of
the local government areas in relation to the electricity
network according to land title.
Local topography and other variability in the local
terrain such as surface roughness exert a major
influence on wind speed and wind variability. Wind
speed varies with height and with the shape and
roughness of the terrain. Wind speed decreases
with an increasingly rough surface cover, but can be
accelerated over steep hills, reaching a maximum at
the crest and then separating into zones of turbulent
air flow. There are also thermal effects and funnelling
which need to be considered when assessing wind
resources. All of these effects impact on capacity
factors (Coppin et al. 2003; ESIPC 2005). Australias
high capacity factors reflect the large development
potential.
Because of these factors meso-scale maps such as
figure 9.8 do not account for fine-scale topographical
accelerations of the flow. In particular, the effect
of any topographical feature smaller than 3 km is
unlikely to be accounted for. In mountainous country,
topographical accelerations (and decelerations)
because of these finer scale features commonly
exceed 20 per cent. As such, these maps are useful
only for preliminary selection of sites: detailed
assessment of wind energy resources for potential
wind farm location sites requires integration of high
9.3.2 Wind energy market

The wind energy market in Australia is growing at
a rapid pace, driven by an increasing emphasis on
cleaner energy sources and government policies
encouraging its uptake. The wind energy industry
has been the fastest growing renewable energy
source, largely because it is a proven technology,
and has relatively low operating costs and
environmental impact.

In 200708, wind energy accounted for only 0.2
per cent of primary energy consumption (table 9.1).
However, wind is the fastest growing energy source
in Australia, increasing at an average annual rate of
69.5 per cent between 199900 and 200708.
In Australia, wind energy was first utilised for
electricity generation in 1994 and the industry
has expanded rapidly in recent years (figure 9.9).
Australias wind electricity generation was 3.9 TWh
(14.2 PJ) in 200708, accounting for 1.5 per cent of
total electricity output in Australia.
1.6
4.5
4.0
3.5
3.0
(TWh)
Share of electricity
generation (%)
2.5
1.2
1.0
0.8
2.0
247
1.4
The New South Wales Wind Atlas (Sustainable Energy

Development Authority, NSW 2002) shows that the
areas with the highest wind energy potential lie along
the higher exposed parts of the Great Dividing Range
and very close to the coast except where there is
significant local sheltering by the escarpment. The
best sites result from a combination of elevation,
local topography and orientation to the prevailing
wind. Significantly, the atlas map shows that some
inland sites have average wind speeds comparable
with those in coastal areas of southern Australia.
quality monitoring measurements with a micro-scale

model of wind flow incorporating the effects of
topography and terrain roughness.
TWh
of Western Australia, South Australia and western

Victoria all have good wind resources. Areas with
high wind potential also lie along the higher exposed
parts of the Great Dividing Range in south-eastern
Australia, such as the Southern Highlands and New
England areas.
0.6
1.5
1.0
0.4
0.5
0.2
0
1993-94 1995-96 1997-98 1999-00 2001-02 2003-04 2005-06
Year
AERA 9.9
Figure 9.9 Australias wind electricity generation

Source: IEA 2009; ABARE 2009a

In September 2009, there were 85 wind farms in
Australia with a combined installed capacity of 1.7 GW
(table 9.4). The majority of these power stations were
located in South Australia (48 per cent), Victoria (23
per cent) and Western Australia (12 per cent) (figure
9.10). Information on recently developed wind energy
projects is provided in box 9.2.
The size of wind farms is increasing, as companies
with capacity to install large farms take advantage of
economies of scale and capitalise on sites with high
wind potential. Australias largest wind farm is the
Waubra wind farm in Victoria (192 MW), which was
Table 9.4 Australias wind energy industry: number of farms and installed capacity, by state, 2009
State/Territory
Farms
no.
Installed capacity
MW
Share of total capacity

%
South Australia
19
810.9
47.6
Victoria
19
383.9
22.5
Western Australia
19
202.7
11.9
New South Wales
149.0
8.7
Tasmania
143.9
8.4
Queensland
12.5
0.7
Northern Territory
0.1
0.0
Australia
85
1703
100.0
Source: Geoscience Australia 2009; ABARE 2009b
Queensland
1%
Tasmania
8%
New South
Wales
9%
Western
Australia
12%
By 202930 wind energy is projected to provide about

12 per cent of Australias electricity (ABARE 2010).
Northern
Territory
0%
9.4.1 Key factors influencing the

future development of Australias
wind resources
South Australia
48%
Victoria
23%
248
AERA 9.10
Figure 9.10 Installed wind energy capacity, by state,

2009
commissioned in mid 2009, followed by Lake Bonney

in South Australia (159 MW). However, wind farms
larger than 200 MW and up to 1000 MW are planned
or under construction. More detailed information on
project developments is provided in section 9.4.2.

Australias wind energy
Australia accounts for only a small share of world
wind energy production (an estimated 2 per cent
in 2008); however, it grew at a faster rate (69 per
cent) than average between 199900 and 200708.
While wind currently accounts for only 1.5 per cent of
Australias electricity generation its share is likely to
increase, driven substantially by government policies
such as the Australian Governments Renewable
Energy Target (RET) and the fact that wind energy is
a proven renewable energy technology with extremely
low greenhouse gas emissions.
Worldwide, wind energy is the fastest growing

form of electricity generation and is set to play
an increasingly important role in the energy mix,
globally as well as in Australia. It is a proven and
mature technology and the output of both individual
turbines and wind farms has increased significantly
in the past five years. The wind energy market has
reached a mature stage in some energy markets,
such as in western Europe, because it is already cost
competitive with other forms of electricity generation.
The expansion of wind energy in Australia is likely to
be enhanced by government policies favouring low
emissions, such as the RET and emissions reduction
targets and the increasing cost competitiveness of
wind energy. The RET will help drive the growth of
renewable energy sources in the period to 2020.
After 2020 the proposed emissions reduction
target carbon price is projected to rise to levels that
continue to drive the growth of renewable energy.
Wind energy is likely to particularly benefit.
Wind is generally the most cost competitive
renewable source of electricity generation behind
hydro. However, it has significantly more growth
potential because of the greater level of as yet
unutilised resources. Its cost competitiveness
will be enhanced by a reduction in the cost of
turbines, particularly through low cost, high volume
manufacturing in countries such as India and China,
and to a lesser extent by further efficiency gains
through turbine technology development.
Factors that may limit development of wind energy on
a localised basis are a lack of electricity transmission
infrastructure to access remote wind resources, and
the intermittency and variability of wind energy. The
variability of wind energy can create difficulties in
integration into the electricity system where supply
must balance demand in real time to maintain

system stability and reliability. This becomes more of
a problem as the amount of wind energy incorporated
into the grid increases and can become significant
in a localised context. However, at the levels of wind
energy penetration projected, these issues should
be effectively managed by greater geographic spread
of wind resources, improvements to the response
capabilities of the grid through improved forecasting,
continued use of conventional fuels for base load
electricity generation and increased use of gas
turbines in peaking generation.
Wind energy an increasingly cost-competitive

mature low emissions renewable energy source
The rapid expansion of wind energy over the past
decade is the outcome of international research
and development that has resulted in major
improvements in wind turbine technology.
The most significant technological change in wind
turbines has been substantial increases in the
size and height of the rotor, driven by the desire to
access higher wind speeds (wind speed generally
increases with height above the ground) and thereby
increase the energy extracted. The size of the rotor is
determined by the maximum aerodynamic efficiency,

which is adjusted to keep the tip speed under control,
and so minimise noise concerns, and to spill wind
when the turbine reaches maximum output.
The size and output of wind turbine rotors has doubled
over the past fifteen years (figure 9.19). For example,
Australias first large-scale grid-connected wind farm
(at Crookwell, New South Wales) in 1998 comprised
eight 600 kW wind turbines each with a rotor diameter
of 44 metres for a combined energy output of 4.8 MW.
Today most onshore wind turbine generators have a
capacity of 1.5 to 2 MW; the largest wind turbines
designed for offshore sites have a capacity of 5
MW and rotor blades up to 60 m long (120 m rotor
diameter). The recently commissioned Capital Wind
Farm (near Goulburn in New South Wales) comprises
67 wind turbines, each with a rating of 2.1 MW and
rotor diameter of 88 metres, resulting in total installed
capacity of 141 MW.
Efficiency gains through onshore turbine technology
are now slowing, and further increases in cost
competitiveness will be driven by reducing manufacturing
costs. This is being achieved primarily through a
move to low cost, high volume turbine production.
Box 9.2 Wind projects recently developed

Since 2005, there have been some 17 wind energy projects completed in Australia, with a combined
generation capacity of around 1475 MW. Of these, seven were developed in South Australia, five in Victoria,
two in Western Australia, two in New South Wales and one in Tasmania. The largest project completed was
the Waubra wind farm in Victoria, completed in 2009 by Acciona Energy and ANZ Energy Infrastructure Trust.
Table 9.5 Wind projects recently developed, as at late 2009
Project
Company
Cape Bridgewater
Pacific Hydro
State
Start up
Capacity
VIC
2008
58 MW
Capital Wind Farm
Renewable Power Ventures
NSW
2009
141 MW
Cathedral Rocks
Roaring40s/Hydro Tasmania & Acciona Energy
SA
2005
66 MW
Cullerin Range Wind Farm
Origin Energy
Emu Downs
Transfield Services Infrastructure Ltd & Griffin Energy
NSW
2009
30 MW
WA
2006
79.2 MW
Hallett 1
AGL
SA
2007
94.5 MW
Lake Bonney 1
Babcock and Brown Wind Partners
SA
2005
80.5 MW
Lake Bonney 2
Babcock and Brown Wind Partners
SA
2008
159 MW
Mount Millar
Transfield Services Infrastructure Ltd
SA
2006
70 MW
Portland stage 3
Pacific Hydro
VIC
2009
44 MW
Snowtown
Wind Prospect and Trust Power
SA
2007
98.7 MW
Walkaway
Babcock and Brown Wind Partners/Alinta Ltd
WA
2005
90 MW
Wattle Point
ANZ Energy Infrastructure Trust/Wind Farm

Developments
SA
2005
91 MW
Waubra
Acciona Energia/ANZ Energy Infrastructure Trust
VIC
2009
192 MW
Wonthaggi
Wind Power Pty Ltd
VIC
2005
12 MW
Woolnorth
Roaring40s/Hydro Tasmania
TAS
2007
140.25 MW
Yambuk
Pacific Hydro Ltd
VIC
2007
30 MW
249
Cost of development
The costs specific to developing a new wind farm
will vary across projects and locations. They will be
influenced by a number of factors such as:

The cost of turbines;

Proximity to existing infrastructure;
Ease of grid integration;
Whether the development is onshore or offshore;
The life of the project;
Government policies and regulations;
Environmental impact; and
Community support.
These factors influence the spread of development

costs across different countries (figure 9.11).
cent and 80 per cent of a projects lifetime costs

(Blanco 2009, Dale et al. 2004). This is primarily
because of the high cost of turbines (figure 9.12)
and grid integration infrastructure relative to the low
variable costs. The only variable costs are operation
and maintenance costs, as the resource used in
electricity generation (i.e. wind) is free. Individual
turbines can cost up to $3 million. A tightness in
supply and high metal prices led to substantial
increases in the cost of turbines in the period
200408 but prices for 2010 delivery have eased
(Beck and Haarmeyer 2009). Figure 9.13 shows a
schematic life-cycle cost structure of a typical wind
farm, as estimated by Dale et al. (2004).
140
Lifecycle cost structure
120
The development of wind energy is relatively capital

intensive compared with many other energy sources,
estimated to typically comprise between 70 per
250
Offshore
Index
Japan
Switzerland
Italy
Ireland
Germany
Spain
United Kingdom
Portugal
Australia
Netherlands
Canada
Greece
Mexico
Onshore
100
80
60
40
20
index: total cost of onshore=100
0
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Year
AERA 9.13
Figure 9.13 Lifecycle costs of a typical wind farm

Source: Dale et al. 2004
AERA 9.11
500
1000
1500
2000
2500
3000
3500
4000
A$/kW
Figure 9.11 Estimated average wind energy project

cost, 2007
Source: IEA 2008; ABARE 2009b
Power conditioning
and grid integration
7%
Installation
2%
Other
2%
A wind farms revenue stream at its most basic level

is the product of the amount and price of electricity
sold to the grid. Higher income streams are favoured
by a higher electricity price and by larger wind farms
with larger turbines (and hence greater capacity).
Consequently, countries with relatively more highly
developed wind energy industries typically have
a combination of good wind conditions and high
electricity prices. Direct subsidies and other clean
energy initiatives may further influence the uptake of
wind energy.
Economies of scale
Electrical
infrastructure
9%
Civil works
11%
Wind turbine
69%
AERA 9.12
Figure 9.12 Capital costs of a typical wind farm

Source: Mathew 2006
At the end of 2008, small wind farms (less than

10MW capacity) comprised 70 per cent of operating
wind farms in Australia, but accounted for less than
2 per cent of Australias wind energy capacity (figure
9.14). On the other hand, large wind farms (greater
than 100 MW capacity) comprised 6 per cent of
operating wind farms but accounted for around 38
per cent of Australias wind generating capacity.
Medium sized wind farms (10100 MW capacity)
accounted for the majority of wind energy capacity
in Australia, around 60 per cent. Large operations
account for a much greater proportion of proposed
operations (tables 9.7 and 9.8; ABARE 2009b).
a) Number of installed wind farms, by farm size
The increasingly large size of wind farms reflects

the economies of scale to be gained through larger
operations. Heavy utilisation of sites with high wind
potential and consolidation of generating technology
will significantly reduce grid integration costs and
maximise the economic gains from wind energy.
The economies of scale can be seen by the lower
cost per kWh of larger wind farms (figure 9.15).
In addition, larger firms are more able to cover the
considerable fixed costs of setting up larger wind
farms, which is reflected in a trend toward industry
consolidation.
>100MW
6%
10 - 100MW
24%
0 - 10MW
70%
Past barriers to the development of larger

installations have been the large up-front capital
costs and the associated uncertainty about achieving
secure contracts for the electricity generated.
However, this barrier is declining in importance
because of the increasing demand for low emission
renewable energy. As returns to investments are
proven and become more secure, larger investments
are emerging.
b) Total installed capacity, by farm size

0 - 10MW
2%
On a levelised cost of technology basis (including
capital, operating, fuel, and maintenance costs, and
capacity factor) wind energy compares favourably
with traditional sources of electricity generation,
such as coal, oil, gas, nuclear and biomass (figures
2.18, 2.19, Chapter 2). Moreover, its uptake will
be favoured by the RET. Lower manufacturing costs
together with improvements in turbine efficiency and
performance, and optimised use of wind sensing
equipment are expected to decrease the cost of wind
technology in the future.
>100MW
38%
251
10 - 100MW
60%
Time to develop
AERA 9.14
Figure 9.14 Current wind energy installations in

Australia, by farm size
The development process after feasibility has been

ascertained is relatively simple, comprising an
approval stage and a building stage. The length
of the approval stage can vary widely, depending
on the relevant authorities requirements and the
complexity of the approval process. Construction
time varies depending on a number of factors but is
short compared with many other forms of electricity
generation. For example, the 192 MW Waubra
wind farm began construction in November 2006
and was completed in May 2009 a total of about
2.5 years. Construction of smaller projects can be
significantly quicker: the 30 MW Cullerin Range Wind
Farm took 1 year, after commencing in June 2008 it
was completed in June 2009. Because of additional
foundation and grid integration requirements,
installation of offshore wind farms involves longer
building times. Remoteness and complexity of terrain
will also affect the building time. Conversely, one
advantage of wind energy is that, compared with
many other renewable technologies, it is a proven
technology that is relatively straightforward to build
and commission.
220
210
50MW
200
200MW
190
500MW
180
170
160
150
140
AERA 9.15
130
6.4 - 7.0
7.0 - 7.5
7.5 - 8.0
8.0 - 8.8
Wind speed (m/s)
Figure 9.15 Wind levelised cost of technology,

by farm size
Note: This EPRI technology status data enables the comparison of
technologies at different levels of maturity. It should not be used to
forecast market and investment outcomes.
Source: EPRI technology status data
Policy environment
The current and prospective policy environments
within which a wind farm is operating are central to
the effectiveness and competitiveness with which
it operates. Direct support through subsidisation
or favourable tax policies (as in some countries),
or indirect support for renewables from costs
imposed on greenhouse gas emissions will enhance
the competitiveness of wind energy and other
renewables sources of energy. The operation of wind
turbines produces no carbon dioxide emissions, and
emissions involved in the development stage are
modest by comparison with electricity generation from
other sources. In Australia growth of wind energy
is favoured by the Renewable Energy Target and
proposed reductions in carbon emissions.
a) Number of proposed wind farms, by farm size
Wind is a highly variable resource and so, therefore,

is wind energy production. The high ramp rate of
wind energy production is an associated and equally
important characteristic, particularly in integrating
the electricity produced into the electricity grid.
Because wind energy increases more than
proportionately with wind speed, electricity generation
from wind energy can increase very rapidly (point A to
B in figure 9.17). Similarly, if wind speeds exceed the
turbine rating the turbine shuts down and electricity
generation can drop from maximum to zero very
quickly (point C to D). The variability and intermittency
of wind energy needs to be matched by other fast
response electricity generation capacity, or demand
response. In practice this is met by complementary
electricity generation capacity, typically hydro energy
or increasingly gas.
Because of wind energys inherent supply
intermittency and variability, with electricity generation
fluctuating according to the prevailing weather
conditions, season and time of day, the penetration
of wind energy in the Australian market will depend
in part on improved grid management practice. A
range of initiatives is being taken to enhance grid
responsiveness (AER 2009). An important factor in
this process is the installation of sufficient capacity
to effectively manage increased supply volatility.
0 - 10MW
13%
>100MW
32%
252
Grid integration managing an intermittent

source of energy
10 - 100MW
55%
Grids dominated by electricity generated from

conventional fuels can face difficulties in dealing with
renewables other than hydro and tend to be limited to
1020 per cent penetration by power quality issues,
installed capacity and current grid management
techniques. Given that wind energy accounted for only
1.5 per cent of Australias total electricity generation
in 200708, however, this has only been an issue at
a localised level, where wind energy penetration can
be much higher. Wind accounts for around only 4 per
cent of registered capacity in the National Electricity
Market (NEM) but has a significantly higher share in
South Australia at 20 per cent (AER 2009).
b) Total proposed capacity, by farm size

0 - 10GW
0%
10 - 100MW
28%
2000
Power output (kW)
Rated power
>100MW
72%
Rated
wind
Cut-in
wind
Cut-out
wind
A
0
AERA 9.16
10
15
20
Hub height wind speed (m/s)
25
30
AERA 9.17
Figure 9.16 Proposed wind energy installations by

farm size
Figure 9.17 Power curve and key concepts for a typical

wind turbine
Source: Ackermann 2005
The limits for a particular grid are determined by a

number of factors, including the size and nature of
existing connected generating plants and the capacity
for storage or demand management. In grids with
heavy fossil fuel reliance and sufficient hydro for
balancing, wind energy penetrations of less than 10
per cent are manageable; penetration levels above 20
per cent may require system and operational changes.
Gas-fired electricity generation using gas turbines, as
an alternative fast response energy source, is likely to
play an increasingly important role as the proportion
of wind and other intermittent renewable energy used
increases (AER 2009). Augmentation of the grid will
also be required (AEMO 2009).
Accurate and timely wind forecasting using a range
of new techniques and real-time wind and generation
modelling will also enhance wind energy penetration
and grid integration (Krohn et al. 2009). The Wind
Energy Forecasting Capability (WEFC) system will
produce more accurate forecasts of wind electricity
generation over a range of forecast timeframes that
can be used by the Australian Energy Market Operator
(AEMO), wind farms and other market participants to
better appreciate and manage the balance between
supply and demand and the interaction between
baseload and peakload generation.
In essence, an intelligence layer is being added to the
core transmission and distribution systems. Research
into Smart Grids automated electricity systems that
are able to automatically respond to changes in supply
from renewables and fluctuations in electricity demand
is being conducted in a number of countries, including
Australia. Smart grids allow real-time management and
operation of the network infrastructure. The Australian
Government has committed $100 million to trial smart
grid technologies.
Various other experimental technologies are being
explored, including storage technologies and hybrid
energy installations. The Australian Governments
Advanced Electricity Storage Technologies program
is supporting the development and demonstration
of efficient electricity storage technologies for use
with variable renewable generation sources, such
as wind, in order to increase the ability of renewable
energy-based electricity generation to contribute to
Australias electricity supply system. The advanced
storage technologies include, but are not limited to,
electro-mechanical, chemical and thermal battery
systems.
A report by the Australian Energy Market Commission
(AEMC 2009) recognised the need for increased
flexibility and further expansion of the electricity
transmission grid into new areas not previously
connected to allow for an expanded role of renewable
energy sources in the future. It suggests greater
access to renewable resources clustered in remote
geographic areas through development of connection
hubs or scale efficient network extensions. It also

noted that expansion of gas-fired generation to
back up renewable generation, such as wind, would
place a greater demand for gas supply and pipeline
infrastructure and lead to a greater convergence of
the gas and electricity markets.
With the possible exception of localised areas with
significantly higher than average wind resource (such
as in South Australia and Western Australia), limits
which place economic grid connection at risk are not
likely to be reached in the outlook period.
Offshore wind energy developments

Because sites with the highest wind energy potential
tend to be developed first, newer wind farms are
likely to be sited in areas with progressively lower
capacity factors. There has been some evidence of
this in Europe, where land limitations have resulted
in a declining average capacity factor. It has provided
significant incentive to develop offshore sites.
Currently, development of wind farms offshore are
limited by the high costs of offshore foundations
and high costs of grid connection. Offshore locations
also considerably raise the costs of operation and
maintenance. However, because of substantially
higher wind velocities, and therefore wind energy
potential, compared with onshore sites, research and
development into new technologies to increase the
competitiveness of offshore wind farms is continuing.
Offshore wind turbines are typically larger than those
onshore to balance the increased costs of offshore
marine foundations and submarine electric cables.
Currently commercial, offshore wind farms are
installed at shallow water depths (up to 50 m) with
foundations fixed to the seabed but large scale floating
turbines using ballast tied to the sea floor with cables
are being tested. If successful this will allow offshore
deployment in water more than 100 m deep.
Offshore sites are more important in countries
with significant land access limitations, most notably
in western Europe. Because Australia has sufficient
onshore sites with high potential, offshore sites are
unlikely to be developed in the short term. Australias
offshore sites are likely to be high cost due to
ocean depth.
Electricity transmission infrastructure

a potential long term constraint
Proximity to a major energy load centre is an
important element in a wind farms economic
viability, because the costs of transmission
infrastructure and energy losses in transmission
increase with distance from the grid. Reflecting this,
wind farm developments to date have mostly been in
close proximity (less than 30 km) to the grid (figure
9.18). As the size of wind farms has increased, so
has the distance from the grid, with some proposed
up to 100 km from the grid. The increased costs
253
254
Figure 9.18 Wind energy resources in relation to reserved land and prohibited areas and the transmission grid.
A 25 km buffer zone is shown around the electricity transmission grid
and transmission losses involved impact significantly

on evaluation of the cost competitiveness of the
wind farm overall, and are a key factor in project
evaluation.
Development of remote wind energy resources will
depend on extensions to the existing transmission
grid. This is demonstrated by the significant
reduction of the area with good wind resources
(7m/s and greater shown in figure 9.18) from about
600000km2 to about 3300 km2 when constrained to
within 100 km of the existing electricity transmission
grid (66 kV and greater). The actual area available for
wind farm development is significantly less than this
because of other limitations such as other competing
land uses, forest cover, access, and local planning
and zoning laws (see for example, SEAV 2003).
Social and environmental issues potential

local constraints
Although the low level of environmental impact has
been a major driver of wind farm development, there
are social and environmental aspects of its operation
which have attracted criticism. The most common
criticisms of wind farm developments are on the

basis of aesthetics, low frequency noise pollution
and impacts on local bird populations.
Modern wind turbines can generate noise across
the frequency range of human hearing (20 to
20000Hertz) and extending to low frequency (in the
range of 10 to 200 Hertz) and even infrasound (in
the range of 20 Hz down to 0.001 Hz) levels, below
the detection limit of the human ear. Concerns have
been expressed that low frequency noise emitted
by wind turbines can cause illness to those living in
close proximity to wind turbines. However, research
has shown that the levels of low frequency noise
and infrasound emitted by modern wind turbines
are below accepted thresholds (British Wind Energy
Association 2005). There is a detailed approval
process for every wind farm development which
includes rigorous noise assessment. Compliance is
required with relevant state Environmental Protection
Agency guidelines and regulation.
Certified Wind Farms Australia (CWFA) was instituted
to provide an auditable social and environmental
Box 9.3 The wind turbine a major technological development
Wind turbines capture wind energy within the area

swept by their blades. The blades in turn drive a
generator to produce electricity for export to the
grid. The most successful design uses blades which
generate lift causing the rotor to turn. Some smaller
turbines use drag but they are less efficient. The
common lift-style blades have a maximum efficiency
of around 59 per cent, within the limits imposed by
the designed maximum blade speed. Most modern
wind turbines start producing energy at wind speeds
of around 4 m/s, reach maximum energy at about 1214 m/s, and cut out at wind speeds above 25 m/s.
Other considerations of turbine design include
spacing between turbines, whether they are oriented
upwind or downwind and the use of static or dynamic
rotor designs. In each case a trade-off between size,
cost, efficiency, aesthetics and a range of other
factors is considered in the design of each farm.
Technology development has played an important role
in increasing the competitiveness of wind energy in the
electricity generation market. The size of wind turbines
has reached a plateau after rising exponentially (figure
140
120
100
Diameter (m)
The majority of wind turbines are based on the

Danish three blade design. This design differs from
traditional windmills as the force from high velocity
winds could potentially exceed the fatigue levels
acceptable for components of the turbine. Therefore,
instead of many broad, closely spaced blades, three
long narrow blades achieve a balance between wind
captured and an ability to manage extreme wind
volatility (DWIA 2009).
80
60
40
20
AERA 9.19
0
1975
1980
1985
1990
1995
2000
2005
2010
Year
Figure 9.19 Increasing size of wind turbines over time

Source: Windfacts 2009
9.19). The energy output increases with the rotor

swept area (rotor diameter squared) but the volume
of material (cost and mass) increases in proportion to
the cube of the rotor diameter (USDOE 2008).
Until now, the additional benefits of size increases
have outweighed the additional costs, which have
resulted in the size of turbines increasing rapidly.
While turbines are expected to continue to get bigger,
the additional returns from those size increases are
likely to diminish. Research into rotor design and
materials is aimed at reducing loads on blades to
allow development of larger, lighter rotors and taller
towers with higher capacity factors. Wind turbines
with capacities up to 7.5 MW are being considered
for offshore deployment.
Table 9.6 Outlook for wind energy in Australia

unit
200708
202930
PJ
14.2
160
Share of total
0.2
2.1
Average annual growth, 200708 to 202930
11.6
Electricity output
TWh
44
Share of total
1.5
12.1
11.6

Source: ABARE 2010
sustainability framework for the wind energy

industry. This aims to provide a basis for continual
assessment and improvement of best practice within
the industry, and a mechanism for assessment of
wind farm projects against these benchmarks.
9.4.2 Outlook for wind energy market

Wind is expected to play an increasingly important
role in the energy mix of many countries, including
Australia. It will be essential in meeting the RET,
and is expected to underpin a rapidly expanding

renewables sector. In the latest ABARE long-term
energy projections which are based on the RET and
a 5 per cent emissions reduction target, wind energy
is projected to generate 44 TWh of electricity in
202930, accounting for 12.1 per cent of Australias
electricity generation, and 2.1 per cent of Australias
total primary energy consumption (table 9.6). This
represents 12 per cent average annual growth over
the period to 202930.
255
15
40
12
30
20
10
TWh
50
1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2002900
01
02
03
04
05
06
07
08
30
Tasmania
7%
ACT
0%
Queensland
7%
Victoria
33%
South
Australia
19%
Year
(TWh)
Western
Australia
4%
New South
Wales
30%
Share of total
(%)
AERA 9.2
AERA 9.21
Figure 9.20 Projected Australian wind energy production

and wind share of electricity generation
Figure 9.21 Proposed wind energy capacity by state
Source: ABARE 2010
Source: ABARE 2009b
256
Figure 9.22 Proposed development projects

Source: ABARE 2009b; Windlab Systems Pty Ltd, DEWHA Renewable Energy Atlas (wind map data); Geoscience Australia
Wind energy is projected to be the second fastest

growing energy industry after geothermal over the
outlook period to 202930, reflecting the relatively
low base from which it is growing and the relative
maturity of the technology compared with other
renewable energy sources. It is projected to overtake
hydro electricity production within the outlook period,
to become the largest renewable source of electricity
generation in Australia.

The majority of the planned expansions in wind
energy capacity are expected to occur in southern
regions of Australia with high wind energy potential.
Overall, a further 11.3 GW of wind energy capacity
has been proposed, with the bulk of this in Victoria
(34 per cent), New South Wales (30 per cent) and
South Australia (19 per cent), taking account of both
wind energy potential in these areas and constraints
imposed by the transmission grid (figure 9.21).
As of October 2009, there were eight wind projects in
Australia at an advanced stage of development.
In total, they have a planned capacity of 733 MW,

and a combined capital expenditure of $1.8 billion.
Of the eight projects, three have a planned capacity
of over 100 MW; the remainder vary between 39 and
92 MW (table 9.7).
Wind projects at a less advanced stage of
development had a total of almost 11 GW of
additional capacity (table 9.8). Although the
development of these projects is not certain,
as they are subject to further feasibility and approval
processes, it is of particular note that the average
capacity is 149 MW, compared with an average
capacity of 92 MW for projects at an advanced
stage of development. The most significant of these
prospective projects is the Silverton wind farm in New
South Wales. This is the largest proposed wind farm
development, both in terms of additional capacity
(1000 MW) and capital expenditure ($2.2 billion).
It is currently planned to be commissioned in 2011.
Reflecting high wind potential, the majority of wind
energy projects are planned for the south-east region
of the country.
Table 9.7 Projects at an advanced stage of development, as of October 2009

Project
Company
Location
Status
Start up
Capacity
Capital
Expenditure
Clements Gap
Pacific Hydro
30 km S of Port
Pirie, SA
Under
construction
early 2010
57 MW
$135 m
Crookwell 2
Union Fenosa
Wind Australia
14 km SE of
Crookwell, NSW
Under
construction
2011
92 MW
$238 m
Hallett 2
Energy
Infrastructure
Trust
20 km S of
Burra, SA
Under
construction
late 2009
71 MW
$159 m
Hallett 4 (North
Brown Hill)
Energy
Infrastructure
Investments
12 km SE of
Jamestown, SA
Under
construction
2011
132 MW
$341 m
Lake Bonney
stage 3
Infigen Energy
2 km E of Lake
Bonney, SA
Under
construction
2010
39 MW
na
Musselroe
Roaring 40s
Cape Portland,
Tas
Under
construction
2011
168 MW
$425 m
Oaklands Wind
Farm
AGL/ Windlab
Systems
5 km S of
Glenthompson,
Vic
Under
construction
2011
63 MW
$200 m
Waterloo stage 1
Roaring 40s
30 km SE of
Clare, SA
Under
construction
2010
111 MW
$300 m
257
Source: ABARE 2009b
Table 9.8 Projects at a less advanced stage of development, as of October 2009

Project
Company
Location
Status
Allendale
Acciona Energy
70 MW
Renewable Energy
Development
Australia
Transfield
Services
Govt approval
under way
Govt approval
under way
na
Ararat Wind Farm
20 km S of Mt
Gambier, SA
7 km N of Ararat,
Vic
Capital
Expenditure
$210 m
2011
225 MW
$350 m
50 km SW of
Cairns, Qld
Prefeasibility
study under way
na
130 MW
na
Arriga
Start up
Capacity
Project
Company
Location
Status
Badgingara Wind
Farm
Griffin Energy/
Stanwell
Corporation
Mitsui
200 km N of
Perth, WA
170 km SE of
Melbourne, Vic
Barn Hill, SA
Bald Hills Wind

Farm
Barn Hill
Baynton
Ben Lomond
Wind Farm
Ben More
Berrybank Wind
Farm
Boco Rock Wind
Farm
Carmodys Hill
Wind Farm
Cattle Hill Wind
Farm
Collector
258
Collgar Wind
Farm
Conroys Gap
Wind Farm
Coopers Gap
Wind Farm
Crowlands Wind
Farm
Crows Nest Wind
Farm
Darlington Wind
Farm
Drysdale Wind
Farm
Flyers Creek Wind
Farm
Glen Innes Wind
Farm
Gullen Range
Wind Farm
Gunning
Hallett 3 (Mt
Bryan)
Hallett 5 (The
Bluff)
Hawkesdale Wind
Farm
High Road
Keyneton
Kongorong
Kulpara
Lal Lal Wind Farm
Lexton Wind Farm
Lincoln Gap Wind
Farm
Transfield
Services
Transfield
Services
AGL
Transfield
Services
Union Fenosa
Wind Australia
Wind Prospect
Pacific Hydro
NP Power
Transfield
Services
Investec Bank/
Windlab Systems
Origin Energy
AGL/ Windlab
Systems
Pacific Hydro
AGL
Union Fenosa
Wind Australia
Wind Farm
Developments
Flyers Creek Wind
Farm
Glen Innes Wind
Power
Epuron
Acciona Energy
AGL
AGL
Union Fenosa
Wind Australia
Transfield
Services
Pacific Hydro
Transfield
Services
Transfield
Services
West Wind Energy
Wind Power Pty
Ltd
NP Power/ Infigen
Energy
80 km N of
Melbourne, Vic
62 km N of
Armidale, NSW
150 km NW of
Melbourne, Vic
60 km E of
Mortlake, Vic
146 km SW of
Nimmitabel, NSW
18 km N of Mt
Misery, SA
5 km E of Lake
Echo, Tas
50 km NE of
Canberra, NSW
25 km SE of
Merredin, WA
17 km W of Yass,
NSW
65 km S of Dalby,
Qld
30 km NE of
Ararat, Vic
43 km N of
Toowoomba, Qld
5 km E of
Mortlake, Vic
3 km N of
Purnim, Vic
20 km S of
Orange, NSW
Waterloo Range,
NSW
25 km NW of
Goulburn, NSW
40 km E of
Goulburn, NSW
Hallett, SA
12 km SE of
Jamestown, SA
35 km N of Point
Fairy, Vic
70 km SW of
Cairns, Qld
10 km SE of
Angaston, SA
30 km SW of Mt
Gambier, SA
100 km NW of
Adelaide, SA
25 km SE of
Ballarat, Vic
44 km NW of
Ballarat, Vic
near Port
Augusta, SA
Start up
Capacity
Feasibility study
under way
2010
130 MW
Capital
Expenditure
na
Govt approval
received
Govt approval
received
Feasibility study
under way
Govt approval
under way
Feasibility study
under way
Govt approval
under way
Govt approval
under way
Govt approval
under way
EIS under way
2011
104 MW
na
2010
130 MW
$300 m
201314
130 MW
na
na
150 MW
$300 m
2014
90 MW
na
2011
$484 m
2012
180
250 MW
270 MW
na
140 MW
$350 m
2011
na
2013
150
210 MW
150 MW
mid 2011
220 MW
$600 m
na
30 MW
na
2011
440 MW
$1.2 b
na
126 MW
$360 m
na
150 MW
2012
2011
270
450 MW
30 MW
$405
435 m
$720 m
na
80100 MW
na
4481 MW
$160
200 m
$150 m
2010
248 MW
$250 m
na
46.5 MW
$139.5 m
2011
80 MW
na
50 MW
2011
62 MW
$216
232 m
$135
145 m
$150 m
2012
50 MW
na
na
120 MW
na
na
120 MW
na
na
80 MW
na
2012
131 MW
2011
38 MW
$320
360 m
$110 m
2011
118 MW
na
Feasibility study
under way
Govt approval
received
Govt approval
received
Govt approval
under way
Govt approval
under way
Feasibility study
under way
Feasibility study
under way
Govt approval
received
Planning approval
under way
EIS under way
Govt approval
under way
Govt approval
received
Feasibility study
under way
Feasibility study
under way
Govt approval
received
Feasibility study
under way
Prefeasibility
study under way
Prefeasibility
study under way
Prefeasibility
study under way
Govt approval
received
Govt approval
received
Govt approval
received
$750 m
na
$60100 m
Project
Company
Location
Status
Macarthur Wind
Farm
Milyeannup Wind
Farm
Moorabool Wind
Project
Mortlake Wind
Farm
Mortons Lane
AGL/ Meridian
Energy
Verve Energy
Macarthur, Vic
Mount Gellibrand
Wind Farm
Mount Hill
Acciona Energy
Mount Mercer
Wind Farm
Mumbida
West Wind Energy

Acciona Energy
NewEn Australia
Transfield
Services
West Wind Energy
Verve Energy
Myponga
TrustPower
Naroghid Wind
Farm
Nilgen Wind Farm
Wind Farm
Developments
Pacific Hydro
Orford
Future Energy
Paling Yards
Union Fenosa
Wind Australia
Pacific Hydro
Portland stage 4
Robertstown
Wind Farm
Ryan Corner Wind
Farm
Sapphire Wind
Farm
Sidonia Hills
Wind Farm
Silverton Wind
Farm
Roaring 40s
Snowtown stage 2
TrustPower
Stockyard Hill
Wind Farm
Stony Gap Wind
Farm
Taralga
Origin Energy
Tarrone
The Sisters Wind
Farm
Tuki Wind Farm
Union Fenosa
Wind Australia
Wind Farm
Developments
Wind Power
Vincent North
Pacific Hydro
Waubra North
Acciona Energy
White Rock Wind

Farm
Woodlawn Wind
Farm
Eureka Funds
Management
Acciona Energy
Union Fenosa
Wind Australia
Wind Prospect
Roaring 40s
Silverton
Wind Farm
Developments
Roaring 40s
RES Australia
Start up
Capacity
Govt approval
received
Govt approval
under way
Feasibility study
under way
Govt approval
under way
Govt approval
received
Govt approval
received, on hold
Prefeasibility
study under way
Govt approval
received
Feasibility study
under way
Govt approval
received
Govt approval
received
Govt approval
under way
Feasibility study
under way
Feasibility study
under way
Govt approval
under way
2010
330 MW
Capital
Expenditure
$850 m
2011
55 MW
$160 m
2014
$600 m
220
360 MW
144 MW
na
30 MW
$60 m
na
232 MW
$696 m
na
80 MW
na
2010
131 MW
2012
90 MW
$320
360 m
$250 m
na
40 MW
na
2011
42 MW
$60100 m
na
100 MW
$280 m
na
100 MW
na
2012
$312 m
na
100
125 MW
54 MW
2014
70 MW
$175 m
2011
136 MW
$327 m
2012
10 km NE of
Kyneton, Vic
25 km NW of
Broken Hill, NSW
Planning approval
under way
Govt approval
received
Govt approval
under way
Planning approval
under way
Govt approval
received
2012
356
485 MW
68 MW
$925
1250 m
$175 m
2011
1000 MW
$2.2 b
5 km W of
Snowtown, SA
35 km W of
Ballarat, Vic
120 km N or
Adelaide, SA
3 km E of
Taralga, NSW
25 km N of Port
Fairy, Vic
12 km S of
Mortlake, Vic
37 km N of
Ballarat, Vic
Yorke Peninsula,
SA
8 km NE of
Waubra, Vic
100 km NE of
Launceston, Tas
40 km S of
Goulburn, NSW
Govt approval
received
Planning approval
under way
Planning approval
under way
Govt approval
received
Feasibility study
under way
Planning approval
under way
Prefeasibility
study under way
Govt approval
under way
Feasibility study
under way
Prefeasibility
study under way
Govt approval
received, on hold
2011
212 MW
na
na
484 MW
$1.4 b
2013
100 MW
$250 m
2011
na
2013
110
165 MW
3040 MW
$90 m
2013
30 MW
$63 m
na
38 MW
na
na
30 MW
$100 m
na
75 MW
na
2014
400 MW
na
na
50 MW
$150 m
20 km E of
Augusta, WA
25 km SE of
Ballarat, Vic
5 km S of
Mortlake, Vic
100 km N of
Warrnambool, Vic
15 km NE of
Colac, Vic
80 km NE of Port
Lincoln, SA
30 km S of
Ballarat, Vic
40 km S of
Geraldton, WA
50 km S of
Adelaide, SA
10 km N of
Cobden, Vic
9 km E of
Lancelin, SA
28 km NW of
Port Fairy, Vic
84 km N of
Goulburn, NSW
Cape Nelson
North and Cape
Sir William Grant,
Vic
123km N of
Adelaide, SA
10 km NW of
Port Fairy, Vic
Inverrel, NSW
$432 m
na
259
Project
Company
Location
Status
Woolsthorpe
Wind Farm
Woorndoo (Salt
Creek)
Worlds End
Wind Farm
Developments
NewEn Australia
2 km W of
Woolsthorpe, Vic
100 km SW of
Ballarat, Vic
Burra, SA
Yaloak Wind Farm
Pacific Hydro
Yass Wind Farm
Epuron
Govt approval
received
Govt approval
received
Feasibility study
under way
Planning approval
under way
Govt approval
under way
AGL
35 km E of
Ballarat, Vic
20 km W of Yass,
NSW
Start up
Capacity
2011
40 MW
Capital
Expenditure
$60100 m
na
30 MW
$60m
na
180 MW
na
30 MW
$486
522 m
na
na
364
600 MW
$800 m
Source: ABARE 2009b
9.5 References
Economics), 2010, Australian energy projections to
202930, ABARE research report 10.02, prepared for the
(forthcoming)
ABARE, 2009a, Australian Energy Statistics, Canberra,
August
ABARE, 2009b, Electricity generation: Major development
Ackermann T, 2005, Wind Power in Power Systems. John
Wiley & Sons Pty. Ltd., Chichester, England
Review of Energy Market frameworks in light of Climate
Change Policies. Final Report. September 2009, Sydney
260
AEMO (Australian Energy Market Operator), 2009, National

transmission statement: National grid 2030 for a low carbon
Australia, December 2009, <http://www.aemo.com.au/
planning/nts2009.html>
Energy Market 2009. The Australian Competition and
Consumer Commission, Melbourne, 321pp
Energy Outlook, Washington, May, <http://www.eia.doe.gov/

oiaf/ieo/index.html>
ESIPC (Electricity Supply Industry Planning Council), 2005,
South Australian wind power study. Planning Council Wind
Report to ECOSA (Essential Services Commission of
South Australia), <http://www.esipc.sa.gov.au/webdata/
resources/files/Planning_Council_Wind_Report_to_ESCOSA.
pdf>
Geoscience Australia, 2009, Map of operating renewable
energy generators in Australia, accessed on 30/07/2009,
<http://www.ga.gov.au/renewable/>
Global Wind Energy Council (GWEC), 2009, Global wind
2008 report, Brussels
Global Wind Energy Council (GWEC), 2008, Global wind
energy outlook, Brussels, October
Balances (2009 edition), OECD, Paris
IEA, 2009b, World Energy Outlook, OECD, Paris
IEA, 2008, IEA wind energy: annual report 2008, OECD,
Paris
American Wind Energy Association, 2009, American Wind Energy

Association, viewed 10 June 2009, <http://www.awea.org>
Krohn S, Morthorst P-E and Awerbuch S, 2009, The

Economics of Wind Energy, The European Wind Energy
Association (EWEA), Brussels, March
Beck S and David Haarmeyer D, 2009, The upside in the

downturn: Realigning the wind industry. Renewable Energy
World Magazine, 12 (March-April), 1-6
Lenzen M, 2009, Current state of development of electricitygenerating technologies: a literature review, Integrated
Sustainability Analysis, The University of Sydney, Sydney
Blanco MI, 2009, The economics of wind energy, Renewable

and Sustainable Energy Reviews, Vol. 13, pp. 13721382
Mathew S, 2006, Wind energy: fundamentals, resource

analysis and economics, Birkhuser
British Wind Energy Association, 2005, Low Frequency

Noise and Wind Turbines Technical Annex, February 2005,
<http://www.bwea.com/pdf/lfn-annex.pdf>
National Wind Watch (NWW), 2009, Cost of pumped hydro

storage, accessed on 29/07/2009, <http://www.windwatch.org/documents/cost-of-pumped-hydro-storage/>
Commission of the European Communities, 2005, The

support of electricity from renewable energy sources,
Commission of the European Communities, Brussels
Prescott R and Van Kooten GC, 2009, Economic costs of

managing of an electricity grid with increasing wind power
penetration, Climate Policy, Vol. 9, Iss. 2, pp. 155169
Coppin PA, Ayotte KA and Steggel N, 2003, Wind resource

assessment in Australia a planners guide, Wind Energy
Research Unit, CSIRO Land and Water
Czisch G, 2001, Global Renewable Energy Potential
Approaches to its Use, viewed 10 June 2009, <http://www.
iset.uni-kassel.de/abt/w3-w/folien/magdeb030901/>
Dale L, Milborrow D, Slark R and Strbac G, 2004. Total
cost estimates for large-scale wind scenarios in UK, Energy
Policy, Vol. 32, pp. 19491956
Danish Wind Industry Association (DWIA), 2009, Danish
Wind Industry Association, accessed on 29/07/2009,
<http://www.windpower.org/en/core.htm>
Department of Resources Energy and Tourism (RET), 2009,
Clean Energy Initiative, Department of Resources Energy
and Tourism, Canberra
Energy Information Administration (EIA), 2009, International
Sustainable Energy Authority Victoria (SEAV), 2003, Victorian

Wind Atlas, Department of Primary Industries, Melbourne,
<http://www.dpi.vic.gov.au/DPI/dpinenergy.nsf/>
Sustainable Energy Development Authority, 2002, The
New South Wales Wind Atlas, Department of Industry and
Investment, Sydney, <http://www.industry.nsw.gov.au/
energy/sustainable/renewable/wind>
U.S. Department of Energy (DOE), 2008, 20% Wind Energy
by 2030: Increasing Wind Energys Contribution to U.S.
Electricity Supply, Washington, July
Windfacts, 2009, Wind Energy: the facts, Accessed:
29/07/2009, <http://www.wind-energy-the-facts.org/en/>
Chapter 10
Solar Energy
10.1 Summary
K e y m ess a g es

Solar energy is a vast and largely untapped resource. Australia has the highest average solar
radiation per square metre of any continent in the world.
Solar energy is used mainly in small direct-use applications such as water heating. It accounts for
only 0.1 per cent of total primary energy consumption, in Australia as well as globally.
Solar energy use in Australia is projected to increase by 5.9 per cent per year to 24 PJ in
202930.
The outlook for electricity generation from solar energy depends critically on the commercialisation
of large-scale solar energy technologies that will reduce investment costs and risks.
Government policy settings will continue to be an important factor in the solar energy market
outlook. Research, development and demonstration by both the public and private sectors will
be crucial in accelerating the development and commercialisation of solar energy in Australia,
especially large-scale solar power stations.
10.1.1 World solar energy resources

and market
The worlds overall solar energy resource potential
is around 5.6 gigajoules (GJ) (1.6 megawatt-hours
(MWh)) per square metre per year. The highest
solar resource potential is in the Red Sea area,
including Egypt and Saudi Arabia.
Solar energy accounted for 0.1 per cent of world
total primary energy consumption in 2007, although
its use has increased significantly in recent years.
Government policies and falling investment
costs and risks are projected to be the main
factors underpinning future growth in world
solar energy use.
The International Energy Agency (IEA) in its
reference case projects the share of solar energy
in total electricity generation will increase to 1.2
per cent in 2030 1.7 per cent in OECD countries
and 0.9 per cent in non-OECD countries.
is likely to require investment in transmission

infrastructure (figure 10.1).
There are also significant solar energy resources
in areas with access to the electricity grid. The
solar energy resource (annual solar radiation) in
areas of flat topography within 25 km of existing
transmission lines (excluding National Parks), is
nearly 500 times greater than the annual energy
consumption of Australia.

solar resources
Solar radiation is intermittent because of daily
and seasonal variations. However, the correlation
between solar radiation and daytime peak electricity
demand means that solar energy has the potential
to provide electricity during peak demand times.
The annual solar radiation falling on Australia

is approximately 58 million petajoules (PJ),
approximately 10 000 times Australias annual
energy consumption.
Solar thermal technologies can also operate in

hybrid systems with fossil fuel power plants, and,
with appropriate storage, have the potential to
provide base load electricity generation. Solar
thermal technologies can also potentially provide
electricity to remote townships and mining
centres where the cost of alternative electricity
sources is high.
Solar energy resources are greater in the

northwest and centre of Australia, in areas that
do not have access to the national electricity grid.
Accessing solar energy resources in these areas
Photovoltaic systems are well suited to off-grid

electricity generation applications, and where
costs of electricity generation from other sources
are high (such as in remote communities).
10.1.2 Australias solar energy resources
261
120
130
Annual Average Solar Radiation
140
150
10
DARWIN
750 km
20
BRISBANE
30
PERTH
SYDNEY
ADELAIDE
Megajoules/m per day
262
MELBOURNE
Existing solar power

> 100 kW
12
18
13
19
100 - 300 kW
300 - 600 kW
14
20
600 - 1000 kW
15
21
16
22
17
24
HOBART
40
1000 - 2000 kW
Transmission lines
AERA 10.1
Figure 10.1 Annual average solar radiation (in MJ/m ) and currently installed solar power stations with a capacity
of more than 10 kW
2
Source: Bureau of Meteorology 2009; Geoscience Australia
Relatively high capital costs and risks remain

the primary limitation to more widespread use of
solar energy. Government climate change policies,
and research, development and demonstration
(RD&D) by both the public and private sectors
will be critical in the future commercialisation of
large scale solar energy systems for electricity
generation.
The Australian Government has established a
Solar Flagships Program at a cost of $1.5 billion
as part of its Clean Energy Initiative to support the
construction and demonstration of large scale (up
to 1000 MW) solar power stations in Australia.
10.1.4 Australias solar energy market

In 200708, Australias solar energy use
represented 0.1 per cent of Australias total
primary energy consumption. Solar thermal water
heating has been the predominant form of solar
energy use to date, but electricity generation is
increasing through the deployment of photovoltaic
and concentrating solar thermal technologies.
In ABAREs latest long-term energy projections,

which include the Renewable Energy Target, a 5
per cent emissions reduction target, and other
government policies, solar energy use in Australia
is projected to increase from 7PJ in 200708
to 24 PJ in 202930 (figure 10.2). Electricity
generation from solar energy is projected to
increase from 0.1 TWh in 200708 to 4 TWh in
202930 (figure 10.3).

and world market
10.2.1 Definitions
Solar power is generated when energy from the sun
(sunlight) is converted into electricity or used to heat air,
water, or other fluids. As illustrated in figure 10.4, there
are two main types of solar energy technologies:
C H A P T E R 1 0 : S O LAR ENER GY
Solar thermal is the conversion of solar radiation

into thermal energy (heat). Thermal energy
carried by air, water, or other fluid is commonly
used directly, for space heating, or to generate
electricity using steam and turbines. Solar thermal
is commonly used for hot water systems. Solar
thermal electricity, also known as concentrating
solar power, is typically designed for large scale
power generation.
3.0
0.20
Share of total (%)
12
0.15
0.10
0.05
2.5
TWh
PJ
16
3.5
0.25
Solar energy consumption (PJ)
1.1
4.0
20
0.30
0.9
Solar electricity generation (TWh)
0.8
Share of total (%)
0.6
2.0
24
Solar photovoltaic (PV) converts sunlight

directly into electricity using photovoltaic
cells. PV systems can be installed on
rooftops, integrated into building designs
and vehicles, or scaled up to megawatt
scale power plants. PV systems can also
be used in conjunction with concentrating
mirrors or lenses for large scale centralised
power.
0.5
1.5
0.3
1.0
0.2
0.5
0
1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 202904
00
01
02
03
05
06
07
08
30
1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 202900
01
02
03
04
05
06
07
08
30
Year
Year
AERA 10.2
AERA 10.3
Figure 10.2 Projected primary consumption of solar

energy in Australia
Figure 10.3 Projected electricity generation from solar

energy in Australia
Solar Radiation
263
Photovoltaics (PV)
Solar cells, photovoltaic arrays
Solar Thermal
Heat exchange
Solar Hot Water

Concentrating Solar Thermal
Parabolic trough, power tower,
parabolic dish, fresnel reflector
Electricity
AERA 10.4
Process Heat
Space heating, food processing
and cooking, distillation,
desalination, industrial
hot water
Figure 10.4 Solar energy flows

The highest solar resource potential per unit land

area is in the Red Sea area. Australia also has higher
incident solar energy per unit land area than any
other continent in the world. However, the distribution
of solar energy use amongst countries reflects
government policy settings that encourage its use,
rather than resource availability.
Solar thermal and PV technology can also be

combined into a single system that generates both
heat and electricity. Further information on solar
thermal and PV technologies is provided in boxes
10.2 and 10.3 in section 10.4.
10.2.2 Solar energy supply chain

A representation of the Australian solar industry is
given in figure 10.5. The potential for using solar
energy at a given location depends largely on the
solar radiation, the proximity to electricity load
centres, and the availability of suitable sites. Large
scale solar power plants require approximately
2hectares of land per MW of power. Small scale
technologies (solar water heaters, PV modules and
small-scale solar concentrators) can be installed
on existing structures, such as rooftops. Once a
solar project is developed, the energy is captured by
heating a fluid or gas or by using photovoltaic cells.
This energy can be used directly as hot water supply,
converted to electricity, used as process heat, or
stored by various means, such as thermal storage,
batteries, pumped hydro or synthesised fuels.
World solar resources

The amount of solar energy incident on the worlds
land area far exceeds total world energy demand.
Solar energy thus has the potential to make a major
contribution to the worlds energy needs. However,
large scale solar energy production is currently
limited by its high capital cost.
The annual solar resource varies considerably
around the world. These variations depend on
several factors, including proximity to the equator,
cloud cover, and other atmospheric effects.
Figure 10.6 illustrates the variations in solar
energy availability.
The World Energy Council (2007) estimates the
earths surface, on average, has the potential to
capture around 5.4 GJ (1.5 MWh) of solar energy a
year. The highest resource potential is in the Red Sea
area, including Egypt and Saudi Arabia (figure 10.6).
Australia and the United States also have a greater
solar resource potential than the world average. Much
of this potential can be explained by proximity to the
equator and average annual weather patterns.
10.2.3 World solar energy market
264
The world has large solar energy resources which

have not been greatly utilised to date. Solar energy
currently accounts for a very small share of world
primary energy consumption, but its use is projected
to increase strongly over the outlook period to 2030.
Development and
Production
Resource Exploration
Storage
End Use Market
Battery
storage
Industry
Solar photovoltaic
Electricity
Development
decision
Solar collection
Thermal
storage
Commercial
Power plants
Resource potential
Solar thermal
Electricity
Water heating
Residential
AERA 10.5
Figure 10.5 Australias solar energy supply chain

increasing at an average rate of 10 per cent per year

from 2000 to 2007 (table 10.1). Increased concern
with environmental issues surrounding fossil fuels,
coupled with government policies that encourage
solar energy use, have driven increased uptake of
solar technologies, especially PV.
Since solar energy cannot currently be stored for

more than several hours, nor traded in its primary
form, solar energy consumption is equal to solar
energy production. Long term storage of solar energy
is currently undergoing research and development,
but has not yet reached commercial status.
From 1985 to 1989, world solar energy consumption

increased at an average rate of 19 per cent per year
(figure 10.7). From 1990 to 1998, the rate of growth
in solar energy consumption decreased to 5 per cent
per year, before increasing strongly again from 1999
to 2007 (figure 10.7).
Solar energy contributes only a small proportion to

Australias primary energy needs, although its share
is comparable to the world average. While solar
energy accounts for only around 0.1 per cent of
world primary energy consumption, its use has been
120W
60W
60E
120E
60N
Hours of
sunlight
per day
30N
Nil
1.0 - 1.9
2.0 - 2.9
3.0 - 3.9
30S
4.0 - 4.9
5.0 - 5.9
0
6.0 - 6.9
5000 km
AERA 10.6
Figure 10.6 Hours of sunlight per day, during the worst month of the year on an optimally tilted surface
Source: Sunwize Technologies 2008
Table 10.1 Key statistics for the solar energy market

unit
Australia
200708
OECD
2008
World
2007
PJ
6.9
189.4
401.8
Share of total
0.12
0.09
0.08
7.2
4.3
9.6
Electricity output
TWh
0.1
8.2
4.8
Share of total
0.04
0.08
0.02
26.1
36.3
30.8
GW
0.1
8.3
14.7
Source: IEA 2009b; ABARE 2009a; Watt 2009; EPIA 2009
265
The majority of solar energy is produced using

solar thermal technology; solar thermal comprised
96 per cent of total solar energy production in
2007 (figure 10.7). Around half is used for
water heating in the residential sector. Most of
the remainder is used for space heating either

residentially or commercially, and for heating
swimming pools. All of the energy used for
these purposes is collected using solar thermal
technology.
5.0
450
400
Solar thermal
Solar thermal
3.0
TWh
300
PV
4.0
PJ
350
PJ
250
2.0
200
150
1.0
100
0
50
1985
0
1985
1988
1991
1994
1997
2000
2003
Year
1991
1994
1997
2000
2003
Year
2006
2006
AERA 10.9
AERA 10.7
Figure 10.7 World primary solar energy consumption,

by technology
Figure 10.9 World electricity generation from solar

energy, by technology
Source: IEA 2009b
Source: IEA 2009b
a) Solar thermal use

266
1988
a) Solar electricity generation
China
Germany
United States
United States
Spain
Israel
China
Republic of
Korea
Italy
Japan
Turkey
Germany
Netherlands
Greece
Switzerland
Australia
Canada
India
Portugal
Brazil
Australia
0
50
100
150
200
PJ
TWh
b) Share in primary energy consumption
b) Share in total electricity generation
China
Germany
United States
United States
Spain
Israel
China
Republic of
Korea
Italy
Japan
Turkey
Germany
Netherlands
Greece
Switzerland
Australia
Canada
India
Portugal
Brazil
Australia
AERA 10.8
AERA 10.10
0.2
0.4
0.6
Figure 10.8 Direct use of solar thermal energy,

by country, 2007
Figure 10.10 Electricity generation from solar energy,

Source: IEA 2009b
Source: IEA 2009b
Solar thermal energy consumption

The largest users of solar thermal energy in 2007
were China (180 PJ), the United States (62 PJ),
Israel (31 PJ) and Japan (23 PJ). However, Israel
has a significantly larger share of solar thermal in
its total primary energy consumption than any other
country (figure 10.8). Growth in solar thermal energy
use in these countries has been largely driven by
government policies.
Electricity generation accounts for around 5 per
cent of primary consumption of solar energy. All
solar photovoltaic energy is electricity, while around
3 per cent of solar thermal energy is converted to

electricity. Until 2003, more solar thermal energy was
used to generate electricity than solar photovoltaic
energy (figure 10.9).
The largest producers of electricity from solar
energy in 2007 were Germany (3.1 TWh), the United
States (0.7 TWh) and Spain (0.5 TWh), with all other
countries each producing 0.1 TWh or less (figure
10.10). Germany had the largest share of solar
energy in electricity generation, at 0.5 per cent. It is
important to note that these electricity generation
data do not include off-grid PV installations, which
represent a large part of PV use in some countries.
Table 10.2 IEA reference case projections for world solar electricity generation
OECD
unit
2007
2030
TWh
4.60
220
Share of total
0.05
1.66
18
Non-OECD
TWh
0.18
182
Share of total
0.00
0.86
35
World
TWh
4.79
402
Share of total
0.02
1.17
21
Source: IEA 2009a
267
9000
8000
7000
Peak capacity (MW)
6000
5
5000
4
4000
3
3000
% share of solar PV market
2000
1000
AERA 10.11
0
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Year
Other
United States
Germany
Spain
Japan
Australias share of
solar PV market (%)
Figure 10.11 World PV Capacity, 19922007, including off-grid installations

Source: IEA-PVPS 2008
Installed PV generation capacity

The IEAs estimates of total PV electricity generation
capacity (including off-grid generation) show that
Japan (1.9 GW) and the United States (0.8 GW) had
the second and third largest PV capacity in 2007,
following Germany with 3.9 GW (figure 10.11). Over
90 per cent of this capacity was connected to grids
(WEC 2009).
increase to almost 280 TWh in 2030, while

electricity generated from concentrating solar
power systems is projected to increase to almost
124 TWh by 2030 (IEA 2009a).
10.3 Australias solar energy

World market outlook
10.3.1 Solar resources
Government incentives, falling production costs and

rising electricity generation prices are projected to
result in increases in solar electricity generation.
Electricity generation from solar energy is projected
to increase to 402 TWh by 2030, growing at an
average rate of 21 per cent per year to account for
1.2 per cent of total generation (table 10.2). Solar
electricity is projected to increase more significantly
in non-OECD countries than in OECD countries, albeit
from a much smaller base.
As already noted, the Australian continent has the

highest solar radiation per square metre of any
continent (IEA 2003); however, the regions with the
highest radiation are deserts in the northwest and
centre of the continent (figure 10.12).
PV systems installed in buildings are projected to

be the main source of growth in solar electricity
generation to 2030. PV electricity is projected to
120
Australia receives an average of 58 million PJ of solar

radiation per year (BoM 2009), approximately 10000
times larger than the total energy consumption of
5772 PJ in 200708 (ABARE 2009a). Theoretically,
then, if only 0.1 per cent of the incoming radiation
could be converted into usable energy at an efficiency
of 10 per cent, all of Australias energy needs could be
supplied by solar energy. Similarly, the energy falling
130
140
150
10
DARWIN
750 km
268
20
BRISBANE
30
PERTH
SYDNEY
ADELAIDE
MELBOURNE

3
19 - 21
4-6
22 - 24
7-9
25 - 27
10 - 12
28 - 30
13 - 15
31 - 33
Transmission lines
HOBART
40
16 - 18
AERA 10.12
Figure 10.12 Annual average solar radiation

Source: Bureau of Meteorology 2009
on a solar farm covering 50 km by 50 km would be

sufficient to meet all of Australias electricity needs
(Stein 2009a). Given this vast and largely untapped
resource, the challenge is to find effective and
acceptable ways of exploiting it.
While the areas of highest solar radiation in Australia
are typically located inland, there are some gridconnected areas that have relatively high solar
radiation. Wyld Group and MMA (2008) identified
a number of locations that are suitable for solar
thermal power plants, based on high solar radiation
levels, proximity to local loads, and high electricity
costs from alternative sources. Within the National
Electricity Market (NEM) grid catchment area, they
identified the Port Augusta region in South Australia,
north-west Victoria, and central and north-west
New South Wales as regions of high potential for
solar thermal power. They also nominated Kalbarri,
near Geraldton, Western Australia, on the SouthWest Interconnected System, the Darwin-Katherine
Interconnected System, and Alice Springs-Tennant
Creek as locations of high potential for solar
thermal power.
120
Concentrating solar power

Figure 10.12 shows the radiation falling on a flat
plane. This is the appropriate measure of radiation
for flat plate PV and solar thermal heating systems,
but not for concentrating systems. For concentrating
solar power, including both solar thermal power and
concentrating PV, the Direct Normal Irradiance (DNI)
is a more relevant measure of the solar resource.
This is because concentrating solar technologies can
only focus sunlight coming from one direction, and
use tracking mechanisms to align their collectors
with the direction of the sun. The only dataset
currently available for DNI that covers all of Australia
is from the Surface Meteorology and Solar Energy
dataset from the National Aeronautics and Space
Administration (NASA). This dataset provides DNI at
a coarse resolution of 1 degree, equating to a grid
length of approximately 100 km. The annual average
DNI from this dataset is shown in figure 10.13.
Since the grid cell size is around 10 000 km2, this
dataset provides only a first order indication of the
DNI across broad regions of Australia. However, it is
adequate to demonstrate that the spatial distribution
130
Direct Normal Irradiance
140
150
10
DARWIN
750 km
269
20
BRISBANE
30
PERTH
SYDNEY
ADELAIDE
MELBOURNE

3
19 - 21
4-6
22 - 24
7-9
25 - 27
10 - 12
28 - 30
13 - 15
31 - 33
HOBART
40
16 - 18
AERA 10.13
Figure 10.13 Direct Normal Solar Irradiance

Source: NASA 2009
of DNI differs from that of the total radiation shown

in figure 10.12. In particular, there are areas of high
DNI in central New South Wales and coastal regions
of Western Australia that are less evident in the
total radiation. More detailed mapping of DNI across
Australia is needed to assess the potential
for concentrating solar power at a local scale.
Some types of solar thermal power plants, including
parabolic troughs and Fresnel reflectors, need to
be constructed on flat land. It is estimated that
about 2 hectares of land are required per MW of
power produced (Stein 2009a). Figure 10.14 shows
solar radiation, where land with a slope of greater
than 1per cent, and land further than 25 km from
existing transmission lines has been excluded.
Land within National Parks has also been excluded.
These exclusion thresholds of slope and distance
to grid are not precise limits but intended to be
indicative only. Even with these limits, the annual
radiation falling on the coloured areas in figure 10.14
is 2.7 million PJ, which amounts to nearly 500 times
the annual energy demand of Australia. Moreover,
120
power towers, dishes and PV systems are not

restricted to flat land, which renders even this figure
a conservative estimate.
Seasonal variations in resource availability

There are also significant seasonal variations in the
amount of solar radiation reaching Australia. While
summer radiation levels are generally very high
across all of inland Australia, winter radiation has a
much stronger dependence on latitude. Figures 10.15
and 10.16 show a comparison of the December and
June average daily solar radiation. The same colour
scheme has been used throughout figures 10.12 to
10.16 to allow visual comparison of the amount of
radiation in each figure.
In some states, such as Victoria, South Australia
and Queensland, the seasonal variation in solar
radiation correlates with a seasonal variation in
electricity demand. These summer peak demand
periods caused by air-conditioning loads coincide
with the hours that the solar resource is at its most
abundant. However, the total demand across the
National Electricity Market (comprising all of the
130

(Slope < 1%)
140
150
10
DARWIN
750 km
270
20
BRISBANE
30
PERTH
SYDNEY
ADELAIDE
MELBOURNE

3
19 - 21
4-6
22 - 24
7-9
25 - 27
10 - 12
28 - 30
13 - 15
31 - 33
16 - 18
40
HOBART
Transmission lines
AERA 10.14
Figure 10.14 Annual solar radiation, excluding land with a slope of greater than 1 per cent and areas further
than 25 km from existing transmission lines
Source: Bureau of Meteorology 2009; Geoscience Australia
eastern states, South Australia and Tasmania)

is relatively constant throughout the year, and
occasionally peaks in winter due to heating loads
(AER 2009).
10.3.2 Solar energy market

Australias modest production and use of solar energy
is focussed on off-grid and residential installations.
While solar thermal water heating has been the
predominant form of solar energy use to date,
production of electricity from PV and concentrating
solar thermal technologies is increasing.

Australias primary energy consumption of solar
energy accounted for 2.4 per cent of all renewable
energy use and around 0.1 per cent of primary
energy consumption in 200708 (ABARE 2009a).
Production and consumption of solar energy are the
same, because solar energy can only be stored for
several hours at present.
Over the period from 19992000 to 200708,
Australias solar energy use increased at an average
rate of 7.2 per cent per year. However, as illustrated
120
in figure 10.17, the growth rate was not constant;

there was considerable variation from year to year.
The bulk of growth over this period was in the form
of solar thermal systems used for domestic water
heating. PV is also used to produce a small amount
of electricity. In total, Australias solar energy
consumption in 200708 was 6.9 PJ (1.9 TWh), of
which 6.5 PJ (1.8 TWh) were used for water heating
(ABARE 2009a).
Consumption of solar thermal energy, by state

Statistics on PV energy consumption by state are
not available. However, PV represents only 5.8 per
cent of total solar energy consumption; on that
basis, statistics on solar thermal consumption by
state provide a reasonable approximation of the
distribution of total solar energy consumption.
Western Australia has the highest solar energy
consumption in Australia, contributing 40 per cent
of Australias total solar thermal use in 200708
(figure 10.18). New South Wales and Queensland
contributed another 26 per cent and 15 per cent
respectively. The rate of growth of solar energy use
130
December Average Solar

Radiation
140
150
10
DARWIN
750 km
271
20
BRISBANE
30
PERTH
SYDNEY
ADELAIDE
MELBOURNE

3
19 - 21
4-6
22 - 24
7-9
25 - 27
10 - 12
28 - 30
13 - 15
31 - 33
HOBART
40
16 - 18
AERA 10.15
Figure 10.15 December average solar radiation

120
130
June Average Solar Radiation
140
150
10
DARWIN
750 km
20
BRISBANE
30
PERTH
SYDNEY
ADELAIDE
MELBOURNE
272
19 - 21
4-6
22 - 24
7-9
25 - 27
10 - 12
28 - 30
13 - 15
31 - 33
40
HOBART
16 - 18
AERA 10.16
Figure 10.16 June average solar radiation

PV
Solar thermal
PJ
0
1974-75
1977-78
1980-81
1983-84
1986-87
1989-90
1992-93
1995-96
Year
Figure 10.17 Australias primary consumption of solar energy, by technology

Source: IEA 2009b; ABARE 2009a
1998-99
2001-02
2004-05
2007-08
AERA 10.17
over the past decade has been similar in all states

and territories, ranging from an average annual
growth of 7 per cent in the Northern Territory and
Victoria, to an average annual growth of 11 per cent
in New South Wales.
of both their thermal fuel input, and their electrical

output. The result of this difference between fuel
inputs and energy output for fossil fuels is that solar
represents a larger share of electricity generation
output than of fuel inputs to electricity generation.
A range of government policy settings from both

Australian and State governments have resulted in a
significant increase in the uptake of small-scale solar
hot water systems in Australia. The combination of
drivers, including the solar hot water rebate, state
building codes, the inclusion of solar hot water under
the Renewable Energy Target and the mandated
phase-out of electric hot water by 2012, have all
contributed to the increased uptake of solar hot water
systems from 7 per cent of total hot water system
installations in 2007 to 13 per cent in 2008 (BIS
Shrapnel 2008; ABARE 2009a).
In 200708, 0.11 TWh (0.4 PJ) of electricity were

generated from solar energy, representing 0.04 per
cent of Australian electricity generation (figure 10.19).
Despite its small share, solar electricity generation
has increased rapidly in recent years.
Electricity generation from solar energy in Australia

is currently almost entirely sourced from PV
installations, primarily from small off-grid systems.
Electricity generation from solar thermal systems
is currently limited to small pilot projects, although
interest in solar thermal systems for large scale
electricity generation is increasing.
Some care in analysis of generation data in energy
statistics is warranted. For energy accounting
purposes, the fuel inputs to a solar energy system
are assumed to equal the energy generated by the
solar system. Thus, the solar electricity fuel inputs
in energy statistics represent the solar energy
captured by solar energy systems, rather than the
significantly larger measure of total solar radiation
falling on solar energy systems; however this
radiation is not measured in energy statistics. Fossil
fuels such as gas and coal are measured in terms
Most Australian states and territories have in place, or

are planning to implement, feed-in tariffs. While there
is some correlation of their introduction with increased
consumer uptake, it is too early to suggest that these
tariffs have been significant contributors to it. The
combination of government policies, associated public
and private investment in RD&D measures and broader
market conditions are likely to be the main influences.
Northern
Territory
3%
TWh
TWh
South
Australia
8%
Australias total PV capacity has increased

significantly over the last decade (figure 10.20),
and in particular over the last two years. This has
been driven primarily by the Solar Homes and
Communities Plan for on-grid applications and the
Remote Renewable Power Generation Program for
off-grid applications. Over the last two years, there
has been a dramatic increase in the take-up of small
scale PV, with more than 40MW installed in 2009
(figures 10.20, 10.23). This is due to a combination
of factors: support provided through the Solar Homes
and Communities program, greater public awareness
of solar PV, a drop in the price of PV systems,
attributable both to greater international competition
among an increased number of suppliers and a
decrease in worldwide demand as a result of the
global financial crisis, a strong Australian dollar, and
highly effective marketing by PV retailers.
New South
Wales
26%
Western
Australia
40%
Victoria
6%
Queensland
15%
0.12
0.12
0.06
0.06
0.10
0.10
0.05
0.05
0.08
0.08
0.04
0.04
0.06
0.06
0.03
0.03
0.04
0.04
0.02
0.02
0.02
0.02
0.01
0.01
0
0
1992-93
1992-93
Tasmania
2%
1995-96
1995-96
1998-99
1998-99
2001-02
2001-02
Year
Year
2004-05
2004-05
2007-08
2007-08
%%
0
0

AERA 10.18
AERA 10.19
AERA 10.19
Figure 10.18 Solar thermal energy consumption,

by state, 200708
Figure 10.19 Australian electricity generation from

solar energy
Source: ABARE 2009a
Source: ABARE
273
120
100
Off grid
non-domestic
Grid distributed
Diesel grids
Off grid domestic
Peak capacity (MW)
80
Grid centralised
60
40
20
AERA 10.20
0
1992
1993
1994
1995
1996
1997
1998
1999
Figure 10.20 PV installed capacity from 19922008
2000
2001
2002
2003
2004
2005
2006
2007
2008
Year
Note: These estimates represent the peak power output of PV systems. They do not represent the average power output over a year, as solar
radiation varies according to factors such as the time of day, the number of daylight hours, the angle of the sun and the cloud cover. These
capacity estimates are consistent with the PV production data presented in this report
Source: Watt 2009
274
The largest component of installed solar electricity

capacity is used for off-grid industrial and agricultural
purposes (41 MW), with significant contributions
coming from off-grid residential systems (31 MW),
and grid connected distributed systems (30 MW). This
large off-grid usage reflects the capacity of PV systems
to be used as stand-alone generating systems,
particularly for small scale applications. There have
also been several commercial solar projects that
provide electricity to the grid.
Recently completed solar projects

Five commercial-scale solar projects with a combined
capacity of around 5 MW have been commissioned
in Australia since 1998 (table 10.3). All of
these projects are located in New South Wales.
Commissioned solar projects to date have had small
capacities with four of the five projects commissioned
having a capacity of less than or equal to 1 MW. The
only project to have a capacity of more than 1 MW
Table 10.3 Recently completed solar projects
Project
Company
State
Start up
Capacity
Singleton
Energy
Australia
NSW
1998
0.4 MW
Newington
Private
NSW
2000
0.7 MW
Broken Hill
Australian
Inland
Energy
NSW
2000
1 MW
Newcastle
CSIRO
NSW
2005
0.6 MW
Liddell
Ausra
NSW
Late
2008
2 MW
is Ausras 2008 solar thermal attachment to Liddell

power plant, which has a peak electric power capacity
of 2 MW (Ausra 2009). While somewhat larger
than the more common domestic or commercial
installations, these are modestly-sized plants.
However, there are plans for construction of several
large scale solar power plants under the Australian
Governments Solar Flagships Program, which will
use both solar thermal and PV technologies.

Solar energy is a renewable resource: increased use
of the resource does not affect resource availability.
However, the quantity of the resource that can be
economically captured changes over time through
technological developments.
The outlook for the Australian solar market
depends on the cost of solar energy relative to
other energy resources. At present, solar energy is
more expensive for electricity generation than other
currently used renewable energy sources, such as
hydro, wind, biomass and biogas. Therefore, the
outlook for increased solar energy uptake depends
on factors that will reduce its costs relative to other
renewable fuels. The competitiveness of solar energy
and renewable energy sources generally will also
depend on government policies aimed at reducing
greenhouse gas emissions.
Solar energy is likely to be an economically attractive
option for remote off-grid electricity generation. The
long-term competitiveness of solar energy in large-
scale grid-connected applications depends in large

measure on technological developments that enhance
the efficiency of energy conversion and reduce the
capital and operating cost of solar energy systems
and componentry. The Australian Governments
$1.5 billion Solar Flagships program announced as
part of the Clean Energy Initiative will support the
construction and demonstration of large scale
(up to 1000 MW) solar power stations in Australia,
to accelerate development solar technology and
help position Australia as a world leader in that field.

development of Australias solar energy
resources
Australia is a world leader in developing solar
technologies (Lovegrove and Dennis 2006), but
uptake of these technologies within Australia has
been relatively low, principally because of their
high cost. A number of factors affect the economic
viability of solar installations.
Solar energy technologies and costs

Research into both solar PV and solar thermal
technologies is largely focussed on reducing the
costs and increasing the efficiency of the systems.
Electricity generation commercial-scale
generation projects have been demonstrated
to be possible but the cost of the technology is
still relatively high, making solar less attractive
and higher risk for investors. Small-scale solar
PV arrays are currently best suited to remote
and off-grid applications, with other applications
largely dependent on research or government
funding to make them viable. Information on solar
energy technologies for electricity generation is
presented in box 10.1.
Direct-use applications solar thermal hot water
systems for domestic use represent the most
widely commercialised solar energy technology.
Solar water heaters are continuing to be

developed further, and can also be integrated
with PV arrays. Other direct uses include
passive solar heating, and solar air conditioning.
Information on solar energy technologies for
direct-use applications is presented in box 10.2.
With both solar PV and solar thermal generation, the
majority of costs are borne in the capital installation
phase, irrespective of the scale or size of the
project (figure 10.21). The largest cost components
of PV installations are the cells or panels and the
associated components required to install and
connect the panels as a power source. In addition,
the inverter that converts the direct current to
alternating current needs to be replaced at least once
every 10 years (Borenstein 2008). However, there
are no fuel costs once the system is installed,
apart from replacing the inverter, there should be
no costs associated with running the system until
the end of its useful life (20 to 25 years). The major
challenge, therefore, is initial outlay, with somewhat
more modest periodic component replacement,
and payback period for the investment.
Currently, the cost of solar energy is higher than
other technologies in most countries. The minimum
cost for solar PV in areas with high solar radiation
is around US 23 cents per kWh (EIA 2009).
Solar thermal systems have a similar profile to PV,
depending on the scale and type of installation.
The cost of electricity production from solar energy
is expected to decline as new technologies are
developed and economies of scale improve in the
production processes.
The cost of installing solar capacity has generally
been decreasing. Both PV and solar thermal
technologies currently have substantial research
and development funds directed toward them, and
new production processes are expected to result in a
continuation of this trend (figure 10.22). In the United
Costs
2007 US$ per watt
5
4
3
2
PV
1
Years = 25
installation
inverter replacement
Solar thermal
AERA 10.22
0
2011
2013
2015
2017
2019
2021 2023
2025
2027
2029
Year
AERA 10.21
Figure 10.21 Indicative solar PV production profile

and costs
Figure 10.22 Projected average capital costs for

new electricity generation plants using solar energy,
2011 to 2030
Source: ABARE
Source: EIA 2009
275
States, the capital cost of new PV plants is projected

to fall by 37 per cent (in real terms) from 2009 to
2030 (EIA 2009).
276
The Electric Power Research Institute (EPRI) has

developed estimates of the levelised cost of
technologya, including a range of solar technologies,
to enable the comparison of technologies at different
levels of maturity (Chapter 2, figures 2.18, 2.19). The
solar technologies considered are parabolic troughs,
central receiver systems, fixed PV systems and
tracking PV systems. Central receiver solar systems
with storage are forecast to have the lowest costs
of technology in 2015. Adding storage to the central
receiver systems or to parabolic troughs is estimated
to decrease the cost per KWh produced, as it allows
the system to produce a higher electricity output.
Tracking PV systems are forecast to have the lowest
cost of the options that do not incorporate storage.
The EPRI technology status data in figures 2.18
and 2.19 show that, although solar technologies
remain relatively high cost options throughout the
outlook period, significant reductions in cost are
anticipated by 2030. The substantial global RD&D
(by governments and the private sector) into solar
technologies, including the Australian Governments
$1.5 billion Solar Flagships Program to support the
construction and demonstration of large scale solar
power stations in Australia, is expected to play a key
role in accelerating the development and deployment
of solar energy.
The time taken to install or develop a solar system
is highly dependent on the size and scale of the
project. Solar hot water systems can be installed
in around four hours. Small-scale PV systems
can similarly be installed quite rapidly. However,
commercial scale developments take considerably
longer, depending on the type of installation
and other factors, including broader location or
environmental considerations.
Location of the resource

In Australia, the best solar resources are commonly
distant from the national electricity market (NEM),
especially the major urban centres on the eastern
seaboard. This poses a challenge for developing
new solar power plants, as there needs to be a
balance between maximising the solar radiation and
minimising the costs of connectivity to the electricity
grid. However, there is potential for solar thermal
energy application to provide base and intermediate
load electricity with fossil-fuel plants (such as gas
turbine power stations) in areas with isolated grid
systems and good insolation resources. The report by
the Wyld Group and MMA (2008) identified Mount Isa,
Alice Springs, Tennant Creek and the Pilbara region as
areas with these characteristics. Access to Australias
major solar energy resources as with other remote
renewable energy sources is likely to require
investment to extend the electricity grid.
Stand-alone PV systems can be located close to

customers (for example on roof areas of residential
buildings), which reduces the costs of electricity
transmission and distribution. However, concentrating
solar thermal technologies require more specific
conditions and large areas of land (Lorenz, Pinner
and Seitz 2008) which are often only available long
distances from the customers needing the energy.
In Australia, installing small-scale residential or
medium scale commercial systems (both PV and
thermal) can be highly attractive options for remote
areas where electricity infrastructure is difficult or
costly to access, and alternative local sources of
electricity are expensive.
Government policies
Government policies have been implemented at
several stages of the solar energy production chain
in Australia. Rebates provided for solar water heating
systems and residential PV installations reduce
the cost of these technologies for consumers and
encourage their uptake.
The Solar Homes and Communities Plan, which
began in 2000 and closed in June 2009, provided
rebates for the installation of solar PV systems.
The capacity of PV systems installed by Australian
households increased significantly under this
program (figure 10.23). The expanded RET scheme
includes the Solar Credits initiative, which provides
a multiplied credit for electricity generated by small
solar PV systems. Solar Credits provides an up-front
capital subsidy towards the installation of small solar
PV systems.
The Australian Government has also announced $1.5
billion of new funding for its Solar Flagships program.
This program aims to install up to four new solar
power plants, with a combined power output of up
to 1000 MW, made up of both PV and solar thermal
power plants, with the locations and technologies to
be determined by a competitive tender process. The
program aims to demonstrate new solar technologies
at a commercial scale, thereby accelerating uptake of
solar energy in general and providing the opportunity
for Australia to develop leadership in solar energy
technology (RET 2009b).
The Australian Government has also allocated
funding to establish the Australian Solar Institute
(ASI), which will be based in Newcastle and will have
strong collaborative links with CSIRO and Universities
undertaking R&D in solar technologies. The institute
will aim to drive development of solar thermal and
PV technologies in Australia, including the areas of
efficiency and cost effectiveness (RET 2009a).
Other government policies, including feed-in tariffs,
which are proposed or already in place in most
Australian states and territories, may also encourage
the uptake of solar energy.
a This EPRI technology status data enables the comparison of technologies at different levels of maturity.
It should not be used to forecast market and investment outcomes.
50
the energy required to produce it over a 20 year

system lifespan (MacKay 2009). In areas with less
solar radiation, such as Central-Northern Europe, the
energy yield ratio is estimated to be around four. This
positive energy yield ratio also means that greenhouse
gas emissions generated from the production of
solar energy systems are more than offset over the
systems life cycle, as there are no greenhouse gas
emissions generated from their operation.
40
MW
30
20
10
0
2000
2001 2002
2003
2004
2005
Year
2006
2007
2008
2009
AERA 10.23
Figure 10.23 Residential PV capacity installed under the

Solar Homes and Communities Plan (as of October 2009)
Source: DEWHA 2009
Infrastructure issues
The location of large scale solar power plants
in Australia will be influenced by the cost of
connection to the electricity grid. In the short term,
developments are likely to focus on isolated grid
systems or nodes to the existing electricity grid,
since this minimises infrastructure costs.
In the longer term, the extension of the grid to access
remote solar energy resources in desert regions may
require building long distance transmission lines. The
technology needed to achieve this exists: high voltage
direct current (HVDC) transmission lines are able to
transfer electricity over thousands of kilometres, with
minimal losses. Some HVDC lines are already in use
in Australia, and are being used to form interstate grid
connections; the longest example being the HVDC
link between Tasmania and Victoria. However, building
a HVDC link to a solar power station in desert areas
would require a large up-front investment.
The idea of generating large scale solar energy in
remote desert regions has been proposed on a
much larger scale internationally. In June 2009 the
DESERTEC Foundation has outlined a proposal to
build large scale solar farms in the sun-rich regions of
the Middle East and Northern Africa, and export their
power to Europe using long distance HVDC lines.
More recently, an Asia Pacific Sunbelt Development
Project has been established with the aim of moving
solar energy by way of fuel rather than electricity
from the sunbelt regions such as Australia to those
Asian countries who import energy, such as Japan
and Korea. These projects illustrate the growing
international interest in utilising large scale solar
power from remote and inhospitable areas, despite
the infrastructure challenges in transmitting or
transporting energy over long distances.
Environmental issues
A roof-mounted, grid-connected solar system in
Australia is estimated to yield more than seven times
Most solar thermal electricity generation systems

require water for steam production and this water use
affects the efficiency of the system. The majority of
this water is consumed in wet cooling towers, which
use evaporative cooling to condense the steam after
it has passed through the turbine. In addition, solar
thermal systems require water to wash the mirrors,
to maintain their reflectivity (Jones 2008). It is
possible to use dry cooling towers, which eliminate
most of the water consumption, but this reduces the
efficiency of the steam cycle by approximately 10 per
cent (Stein 2009b).
A further option under development is the use of high
temperature Brayton cycles, which do not use steam
turbines and thus do not consume water. Brayton
cycles are more efficient than conventional Rankine
(steam) cycles, but they can only be achieved by
point-focussing solar thermal technologies (power
towers and dishes).
10.4.2 Outlook for solar energy market

Although solar energy is more abundant in Australia
than other renewable energy sources, plans for
expanding solar energy in Australia generally rely
on subsidies to be economically viable. There
are currently only a small number of proposed
commercial solar energy projects and these projects
are all small scale. Solar energy is currently
more expensive to produce than other forms of
renewable energy, such as hydro, wind and biomass
(Wyld Group and MMA 2008). In the short term,
therefore, solar energy will find it difficult to compete
commercially with other forms of clean energy
for electricity generation in the NEM. However, as
global deployment of solar energy technologies
increases, the cost of the technologies is likely to
decrease. Moreover, technological developments
and greenhouse gas emission reduction policies are
expected to drive increased use of solar energy in the
medium and long term.
Key projections to 202930

ABAREs latest (2010) Australian energy projections
include the RET, a 5 per cent emissions reduction
target, and other government policies. Solar energy
use in Australia is projected to more than triple,
from 7 PJ in 200708 to 24 PJ in 202930,
growing at an average rate of 5.9 per cent a year
(figure 10.27, table 10.4). While solar water heating
is projected to remain the predominant use for solar
277
Box 10.1 Solar energy technologies for electricity generation

Sunlight has been used for heating by generating
fire for hundreds of years, but commercial
technologies specifically to use solar energy to
directly heat water or generate power were not
developed until the 1800s. Solar water heaters
developed and installed between 1910 and 1920
were the first commercial application of solar
energy. The first PV cells capable of converting
enough energy into power to run electrical
equipment were not developed until the 1950s and
the first solar power stations (thermal and PV) with
capacity of at least 1 megawatt started operating in
the 1980s.
Solar thermal electricity

Solar thermal electricity is produced by converting
sunlight into heat, and then using the heat to drive
a generator. The sunlight is concentrated using
mirrors, and focussed onto a solar receiver. This
receiver contains a working fluid that absorbs
the concentrated sunlight, and can be heated up
to very high temperatures. Heat is transferred
from the working fluid to a steam turbine, similar
to those used in fossil fuel and nuclear power
stations. Alternatively, the heat can be stored for
later use (see below).
278
There are four main types of concentrating solar

receivers, shown in figure 10.24. Two of these
types are line-focussing (parabolic trough and Linear
Fresnel reflector); the other two are point-focussing
(paraboloidal dish and power tower). Each of these
types is designed to concentrate a large area of
sunlight onto a small receiver, which enables fluid
to be heated to high temperatures. There are tradeoffs between efficiency, land coverage, and costs
of each type.
The most widely used solar concentrator is the
parabolic trough. Parabolic troughs focus light in one
axis only, which means that they need only a single
axis tracking mechanism to follow the direction of the
sun. The linear Fresnel reflector achieves a similar
line-focus, but instead uses an array of almost flat
mirrors. Linear Fresnel reflectors achieve a weaker
focus (therefore lower temperatures and efficiencies)
than parabolic troughs. However, linear Fresnel
reflectors have cost-saving features that compensate
for lower energy efficiencies, including a greater yield
per unit land, and simpler construction requirements.
The paraboloidal dish is an alternate design which
focuses sunlight onto a single point. This design is
able to produce a much higher temperature at the
Figure 10.24 The four types of solar thermal concentrators: (a) parabolic trough, (b) compact linear Fresnel reflector,
(c) paraboloidal dish, and (d) power tower
Source: Wikimedia Commons, photograph by kjkolb; Wikimedia Commons, original uploader was Lkruijsw at en.wikipedia;
Australian National University 2009a; CSIRO
receiver, which increases the efficiency of energy

conversion. The paraboloidal dish has the greatest
potential to be used in modular form, which may
give this design an advantage in off-grid and remote
applications. However, to focus the sunlight onto
a single point, paraboloidal dishes need to track
the direction of sunlight on two axes. This requires
a more complex tracking mechanism, and is more
expensive to build. The other point focusing design
is the power tower, which uses a series of groundbased mirrors to focus onto an elevated central
receiver. Power tower mirrors also require two-axis
tracking mechanisms; however the use of smaller,
flat mirrors can reduce costs.
The parabolic trough has the most widespread
commercial use. An array of nine parabolic trough
plants producing a combined 354 MW have operated
in California since the 1980s. Several new ones have
been built in Spain and Nevada in the last few years
at around a 5060 MW scale, and there are many
parabolic trough plants either in the construction or
planning phase. While parabolic troughs have the
majority of the current market share, all four designs
are gaining renewed commercial interest. There is an
11 MW solar power tower plant operating in Spain,
and a similar 20 MW plant has recently begun
operating at the same location. The linear Fresnel
reflector has been demonstrated on a small
scale (5MW), and a 177 MW plant is planned for
construction in California. The paraboloidal dish has
also been demonstrated on a small scale, and there
are plans for large scale dish plants.
Methods of power conversion and thermal storage
vary from type to type. While solar thermal plants are
generally suited to large scale plants (greater than
50 MW), the paraboloidal dish has the potential to
be used in modular form. This may give dish systems
an advantage in remote and off-grid applications.
Efficiency of solar thermal

The conversion efficiency of solar thermal power
plants depends on the type of concentrator used,
and the amount of sunlight. In general, the pointfocusing concentrators (paraboloidal dish and
power tower) can achieve higher efficiencies than
line focussing technologies (parabolic trough and
Fresnel reflector). This is possible because the pointfocussing technologies achieve higher temperatures
for higher thermodynamic limits.
The highest value of solar-to-electric efficiency ever
recorded for a solar thermal system was 31.25 per
cent, using a solar dish in peak sunlight conditions
(Sandia 2009). Parabolic troughs can achieve a peak
solar-to-electric efficiency of over 20 per cent (SEGS
2009). However, the conversion efficiency drops
significantly when the radiation drops in intensity,
so the annual average efficiencies are significantly

lower. According to Begay-Campbell (2008), the
annual solar-to-electric efficiency is approximately
1214 per cent for parabolic troughs, 12 per cent
for power towers (although emerging technologies
can achieve 1820 per cent), and 2225 per cent for
paraboloidal dishes. Linear Fresnel reflectors achieve
a similar efficiency to parabolic troughs, with an
annual solar-to-electric efficiency of approximately
12 per cent (Mills et al. 2002).
Energy storage
Solar thermal electricity systems have the potential
to store energy over several hours. The working fluid
used in the system can be used to temporarily store
heat, and can be converted into electricity after the
sun has stopped shining. This means that solar
thermal plants have the potential to dispatch power
at peak demand times. It should be noted, however,
that periods of sustained cloudy weather cut the
productive capacity of solar thermal power.
The seasonality of sunshine also reduces power
output in winter.
Thermal storage is one of the key advantages of
solar thermal power, and creates the potential for
intermediate or base-load power generation. Although
thermal storage technology is relatively new, several
recently constructed solar thermal power plants have
included thermal storage of approximately 7 hours
power generation. In addition, there are new power
tower designs that incorporate up to 16 hours of
thermal storage, allowing 24 hour power generation
in appropriate conditions. The development of cost
effective storage technologies may enable a much
higher uptake of solar thermal power in the future
(Wyld Group and MMA 2008).
Current research is developing alternative energy
storage methods, including chemical storage, and
phase-change materials. Chemical storage options
include dissociated ammonia and solar-enhanced
natural gas. These new storage methods have the
potential to provide seasonal storage of solar energy,
or to convert solar energy into portable fuels. In future,
it may be possible for solar fuels to be used in the
transport sector, or even for exporting solar energy.
Hybrid operation with fossil fuel plants

Solar thermal power plants can make use of
existing turbine technologies that have been
developed and refined over many decades in fossil
fuel technologies. Using this mature technology
can reduce manufacturing costs and increase the
efficiency of power generation. In addition, solar
thermal heat collectors can be used in hybrid
operation with fossil fuel burners. A number of
existing solar thermal power plants use gas burners
to boost power supply during low levels of sunlight.
279
Combining solar thermal power with gas can provide

a hedge against the intermittency of sunlight.
Solar thermal heat collectors can be attached to
existing coal or gas power stations to pre-heat the
water used in these plants. This is possible since solar
thermal heat collectors perform a very similar function
to fossil fuel burners. In this way, solar thermal power
can make use of existing infrastructure. This option
also has no problems with intermittency of sunlight,
since the fossil fuel burners provide firm capacity
of production. Internationally, there are several new
integrated solar combined cycle (ISCC) plants planned
for construction. ISCC plants are similar to combined
cycle gas plants (using both a gas turbine, and a
steam turbine), but use solar thermal heat collectors
to boost the steam turbine production.
Solar updraft towers

An alternative solar thermal power technology is the
solar updraft tower, also known as a solar chimney.
The updraft tower captures solar energy using a large
greenhouse, which heats air beneath a transparent
roof. A very tall chimney is placed at the centre of
the greenhouse, and the heated air creates pressure
differences that drive air flow up the chimney.
Electricity is generated from the air flow using wind
turbines at the base of the chimney.
280
Solar updraft towers have been tested at a relatively

small scale, with a 50 kW plant in Spain being the
only working prototype at present. There are plans to
upscale this technology, including a proposed 200
MW plant in Buronga, NSW. The main disadvantage of
solar updraft towers is that they deliver significantly
less power per unit area than concentrating solar
thermal and PV systems (Enviromission 2009).
Photovoltaic systems
The costs of producing PV cells has declined rapidly
in recent years as uptake has increased (Fthenakis
et al. 2009) and a number of PV technologies have

been developed. The cost of modules can be reduced
in four main ways:
making thinner layers reducing material and
processing costs;
integrating PV panels with building elements such
as glass and roofs reducing overall system
costs;
making adhesive on site reducing materials
costs; and
improving decisions about making or buying
inputs, increasing economies of scale, and
improving the design of PV modules.
There are three main types of PV technology:
crystalline silicon, thin-film and concentrating PV.
Crystalline silicon is the oldest and most widespread
technology. These cells are becoming more efficient
over time, and costs have fallen steadily.
Thin-film PV is an emerging group of technologies,
targeted at reducing costs of PV cells. Thin-film PV
is at an earlier stage of development, and currently
delivers a lower efficiency than crystalline silicon,
estimated at around 10 per cent, although many
of the newer varieties still deliver efficiencies of
less than this (Prowse 2009). However, this is
compensated by lower costs, and there are strong
prospects for efficiency improvements in the future.
Thin-film PV can be installed on many different
substrates, giving it great flexibility in its applications.
Concentrating PV systems use either mirrors or
lenses to focus a large area of sunlight onto a central
receiver (figure 10.25). This increases the intensity
of the light, and allows a greater percentage of its
energy to be converted into electricity. These systems
are designed primarily for large scale centralised
Figure 10.25 (a) Example of a rooftop PV system. (b) A schematic concentrating PV system, where a large number of
mirrors focus sunlight onto central PV receivers
Source: CERP, Wikimedia Commons; Energy Innovations Inc. under Wikipedia licence cc-by-sa-2.5
power, due to the complexities of the receivers.

Concentrating PV is the most efficient form of PV,
delivering a typical system efficiency of around
20 per cent, and has achieved efficiencies of just over
40 per cent in ideal laboratory conditions (NREL 2008).
where PV cells can either replace, or be integrated

with existing materials. BIPV has the potential to
reduce costs of PV systems, and to increase the
surface area available for capturing solar energy
within a building (NREL 2009b).
An advantage of using concentrating PV is that it

reduces the area of solar cells needed to capture
the sunlight. PV cells are often expensive to produce,
and the mirrors or lenses used to concentrate the
light are generally cheaper than the cells. However,
the use of solar concentrators generally requires a
larger system that cannot be scaled down as easily
as flat-plate PV cells.
Efficiency of photovoltaic systems
A relatively recent area of growth for PV applications

is in Building-integrated PV (BIPV) systems. BIPV
systems incorporate PV technology into many
different components of a new building. These
components include rooftops, walls and windows,
Currently, the maximum efficiency of commercially

available PV modules is around 25 per cent,
with efficiencies of around 40 per cent achieved
in laboratories. Most commercially available PV
systems have an average conversion efficiency of
around 20per cent. New developments (such as
multi-junction tandem cells) suggest solar cells
with conversion efficiencies of greater than 40 per
cent could become commercially available in the
future. Fthenakis et al. (2009) posit that increases
in efficiency of PV modules will come from further
technology improvements.
Box 10.2 Solar energy technologies for direct-use applications
Solar thermal heating

Solar thermal heating uses direct heat from sunlight,
without the need to convert the energy into electricity.
The simplest form of solar thermal heating is achieved
simply by pumping water through a system of lightabsorbing tubes, usually mounted on a rooftop. The
tubes absorb sunlight, and heat the water flowing
within them. The most common use for solar thermal
heating is hot water systems, but they are also used
for swimming pool heating or space heating.
There are two main types of solar water heaters:
flat-plate and evacuated tube systems (figure 10.26).
Flat-plate systems are the most widespread and
mature technology. They use an array of very small
tubes, covered by a transparent glazing for insulation.
Evacuated tubes consist of a sunlight absorbing
metal tube, inside two concentric transparent glass
tubes. The space between the two glass tubes is
evacuated to prevent losses due to convection.

Evacuated tubes have lower heat losses than flat
plate collectors, giving them an advantage in winter
conditions. However, flat-plate systems are generally
cheaper, due to their relative commercial maturity.
Solar thermal heating is a mature technology and
relatively inexpensive compared to other solar
technologies. This cost advantage has meant
that solar thermal heating has the largest energy
production of any solar technology. In some countries
with favourable sunlight conditions, solar water
heaters have gained a substantial market share
of water heaters. For example, the proportion of
households with solar water heaters in the Northern
Territory was 54 per cent in 2008 (CEC 2009); in
Israel, this proportion is approximately 90 per cent
(CSIRO 2010).
Figure 10.26 (a) Flat-plate solar water heater. (b) Evacuated tube solar water heater
Source: Western Australian Sustainable Energy Development Office 2009; Hills Solar (Solar Solutions for Life) 2009
281
Solar air conditioning
basic elements: a north-facing (in the Southern

Hemisphere) window of transparent material that
allows sunlight to enter the building; and a thermal
storage material that absorbs and stores heat.
Passive solar heating must also be integrated with
insulation to provide efficient storage of heat, and
roof designs that can maximise exposure in winter,
and minimise exposure in summer. Although some of
these features can be retrofitted to existing buildings,
the best prospects for passive solar heating are in
the design of new buildings.
Solar thermal energy can also be used to drive

air-conditioning systems. Sorption cooling uses a
heat source to drive a refrigeration cycle, and can
be integrated with solar thermal heat collectors
to provide solar air-conditioning. Since sunlight
is generally strong when air-conditioning is most
needed, solar air-conditioning can be used to balance
peak summer electricity loads. However, a number
of developments are required before solar airconditioning becomes cost competitive in Australia
(CSIRO 2010).
Combined heat and power systems

A technology under development in Australia and
overseas is the combined heat and power system,
combining solar thermal heating with PV technology
(ANU 2009). Typically this consists of a small-scale
concentrating parabolic trough system with a central
PV receiver, where the receiver is coupled to a
cooling fluid. While the PV produces electricity, heat
is extracted from the cooling fluid and can be used in
the same way as a conventional solar thermal heater.
These systems can achieve a greater efficiency of
energy conversion, by using the same sunlight for
two purposes. These systems are being targeted for
small-scale rooftop applications.
Passive solar heating

Solar energy can also be used to heat buildings
directly, through designing buildings that capture
sunlight, and store heat that can be used at night.
This process is called passive solar heating, and can
save energy (electricity and gas) that would otherwise
be needed to heat buildings during cold weather.
New buildings can be constructed with passive solar
heating features at minimal extra cost, providing a
reliable source of heating that can greatly reduce
energy demands in winter (AZSC 2009).
Passive solar heating usually requires two
energy, the share of PV in total solar energy use is
projected to increase.
Electricity generation from solar energy is projected
to increase strongly, from only 0.1 TWh in 200708
to 4 TWh in 202930, representing an average
annual growth rate of 17.4 per cent (figure 10.28).
The share of solar energy in electricity generation
is also projected to increase, from 0.04 per cent in
200708 to 1 per cent in 202930.

As at October 2009, there were no solar projects
nearing completion in Australia (table 10.5). There
are currently five proposed solar projects, with
a combined capacity of 116 MW. The largest of
these projects is Wizard Powers $355 million
Whyalla Solar Oasis, which will be located in
South Australia. The project is expected to have
a capacity of 80 MW and is scheduled to be
completed by 2012.
While high investment costs currently represent

a barrier to more widespread use of solar energy,
there is considerable scope for the cost of solar
technologies to decline significantly over time. The
competitiveness of solar energy will also depend
3.0
0.20
Share of total (%)
12
0.15
0.10
0.05
2.5
16
3.5
0.25
Solar energy consumption (PJ)
1.1
4.0
TWh
20
0.30
0.9
0.8
Share of total (%)
0.6
2.0
24
PJ
282
on government policies. The RET, the results of

RD&D programs and the proposed emissions
reduction target are all expected to underpin the
growth of solar energy over the outlook period.
0.5
1.5
0.3
1.0
0.2
0.5
0
1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 202904
00
01
02
03
05
06
07
08
30
1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 202900
01
02
03
04
05
06
07
08
30
Year
Year
AERA 10.2
AERA 10.3
Figure 10.27 Projected primary energy consumption

of solar energy
Figure 10.28 Projected electricity generation from

solar energy
Table 10.4 Outlook for Australias solar market to 202930

unit
200708
202930
PJ
24
Share of total
0.1
0.3
5.9
Electricity output
TWh
0.1
Share of total
0.04
1.0
17.4

Table 10.5 Proposed solar energy projects

Project
Company
Location
Status
Start up
Capacity
Capital
expenditure
SolarGas One
CSIRO and Qld

Government
Qld
Government
grant received
2012
1MW
na
Lake Cargelligo
solar thermal
project
Lloyd Energy
Systems
Lake Cargelligo,
NSW
Government
grant received
na
3MW
na
Cloncurry solar
thermal power
station
Lloyd Energy
Systems
Cloncurry, Qld
Government
grant received
2010
10MW
$31m
ACT solar power

plant
ACT Government
To be
determined, ACT
Pre-feasibility
study completed
2012
22MW
$141m
Whyalla Solar
Oasis
Wizard Power
Whyalla, SA
Feasibility study
under way
2012
80MW
$355 m
283
Source: ABARE 2009c; Lloyd Energy Systems 2007
10.5 References
Economics), 2010, Australian energy projections to 202930,
ABARE, 2009a, Australian Energy Statistics, Canberra,
August
ABARE, 2009b, Electricity generation: Major development
Energy Market 2008, <http://www.aer.gov.au/content/
index.phtml/itemId/723386>
dwellings in Australia, North Sydney, <http://www.bis.com.au/

reports/hot_water_systems_nd_in_aust.html>
Borenstein S, 2008, The Market Value and Cost of Solar
Photovoltaic Electricity Production, Centre for the Study of
Energy Markets, University of California
Bureau of Meteorology, 2009, Average Daily Solar Exposure,
<http://www.bom.gov.au/climate/averages/climatology/solar_
radiation/IDCJCM0019_solar_exposure.shtml>
CEC (Clean Energy Council), 2009, Solar Industry Snapshot,
<http://www.bcse.or.au/cec/resourcecentre/reports/
mainColumnParagraphs/00/text_files/file15/CEC%20
Solar%20Sheet_revised_2.pdf>
Ausra, 2009, The Liddell Solar Thermal Power Station,

<http://www.ausra.com/pdfs/LiddellOverview.pdf>
Climate Action Newcastle, 2009, Newcastles Going Solar,

<http://www.climateaction.org.au/files/images/solar%20
panel%20photo_0.jpg>
ANU (Australian National University), 2009a, Solar Thermal

Energy Research, <http://solar-thermal.anu.edu.au/pages/
DownloadPics.php>
CSIRO, 2010, Energy technology in Australia: overview and

prospects for the future, A report for the Department of
Resources, Energy and Tourism, Canberra (forthcoming)
ANU, 2009b, Combined Heat and Power Solar (CHAPS)

Concentrator System, <http://solar.anu.edu.au/projects/
chaps_proj.php>
DESERTEC, 2009, Clean Power From Deserts. Whitebook 4th

Edition, <http://www.desertec.org/en/concept/whitebook/>
AZSC (Arizona Solar Center), 2009, Passive Solar Heating

and Cooling, <http://www.azsolarcenter.com/technology/
pas-2.html>
Begay-Campbell S, 2008, Concentrating Solar Technologies
and Applications: Sandia National Laboratories, <http://
apps1.eere.energy.gov/tribalenergy/pdfs/course_tcd0801_
ca17ax.pdf>
BIS Shrapnel, 2008, Hot water systems installed in new
Desertec-UK, 2009, Concentrating Solar Thermal Power,

<http://www.trec-uk.org.uk/images/schott_parabolic_trough.
jpg>
DEWHA (Department of Environment, Water, Heritage and
the Arts), 2009, Solar homes and communities plan website,
<http://www.environment.gov.au/settlements/renewable/pv/
index.html>
EIA (Energy Information Administration of the United States),
2009, International Energy Outlook 2009, Washington DC
Enviromission, 2009, Technology Overview, <http://

www.enviromission.com.au/EVM/content/technology_
technologyover.html>
EPIA (European Photovoltaic Industry Association), 2009,
Global Market Outlook for Photovoltaics Until 2013,
<http://www.epia.org/publications/epia-publications.html>
Fthenakis V, Mason JE and Zweibel K, 2009, The technical,
geographical, and economic feasibility for solar energy to
supply the energy needs of the US, Energy Policy, vol 37,
no 2, 387399
Geoscience Australia, 2009, Renewable Energy Power
Stations, <http://www.ga.gov.au/renewable/operating/
operating_renewable.xls>
Greenpeace, 2009, Concentrating Solar Power, Global
Outlook 09, <http://www.greenpeace.org/international/
press/reports/concentrating-solar-power-2009>
Outlook 2009, Paris
IEA, 2009b, World Energy Balances (2009 edition), Paris
IEA-PVPS, 2008, Trends in Photovoltaic Applications: Survey
report of selected IEA countries between 1992 and 2007,
IEA Photovoltaic Power Systems Programme
IEA, 2003, Greenhouse Gas Research and Development
Programme The potential of solar electricity to reduce CO2
emissions, Paris
Jiaxing Dyi Solar Energy Co, 2009, Solar Water
Heater-1, <http://jxdiyi.en.made-in-china.com/product/
sqdnACbhfQDM/China-Flat-Solar-Water-Heater-1.html>
Jones J, 2008, Concentrating Solar Thermal Power,
Renewable Energy World Magazine
284
Lloyd Energy Systems, 2007, Cloncurry Solar Thermal

Storage Project, <http://www.lloydenergy.com/
presentations/Cloncurry%20Solar%20Thermal%20
Storage%20Project.pdf>
Lorenz P, Pinner D and Seitz T, 2008, The Economics of
Solar Power. The McKinsey Quarterly, June 2008
Lovegrove K and Dennis M, 2006, Solar thermal energy
systems in Australia. International Journal of Environmental
Studies. 63 (6): 791802
MacKay DJC, 2009, Sustainable Energy Without the Hot
Air. UIT, Cambridge, <http://www.withouthotair.com/>
McKinsey & Company, 2008, The Economics of Solar
Power, in McKinsey Quarterly, June 2008, <http://www.
mckinseyquarterly.com>
Mills D, Morrison G and Le Lievre P, 2002, Project Proposal for
a Compact Linear Fresnel Reflector Solar Thermal Plant in the
Hunter Valley, <http://solar1.mech.unsw.edu.au/glm/papers/
Mills_projectproposal_newcastle.pdf>
National Aeronautics and Space Administration (NASA),
2009, Surface Meteorology and Solar Energy Dataset,
<http://eosweb.larc.nasa.gov/sse>
NREL, 2009a, Photographic Information Exchange,

<http://www.nrel.gov/data/pix/searchpix.html>
NREL, 2009b, Photovoltaic Research Building-Integrated
PV, <http://www.nrel.gov/pv/building_integrated_pv.html>
Prowse R, 2009, Personal communication, 5/6/2009.
Centre Manager, Centre for Sustainable Energy Systems,
Australian National University
RET (Department of Resources, Energy and Tourism),
2009a, Australian Solar Institute Fact Sheet, <http://www.
ret.gov.au/energy/Documents/ASI%20Fact%20sheet%20
14Jan%20cleared%20by%20MO.pdf>
RET, 2009b, Solar Flagships Program Fact Sheet, <http://
www.ret.gov.au/energy/Documents/Solar%20Flagships%20
factsheet%20-%20Oct%202009.pdf>
Sandia, 2009, Lab Accomplishments 2009: Sandia National
Laboratories, <http://www.sandia.gov/LabNews/labsaccomplish/2009/lab_accomplish-2009.pdf>
SEGS, 2009, Solar Electricity Generating Systems website,
<http://www.flagsol.com/SEGS_tech.htm>
Sellsius, 2006, The Worlds Most Efficient Solar Energy,
<http://blog.sellsiusrealestate.com/technology/the-worldsmost-efficient-solar-energy/2006/08/06/>
Solar Systems, 2009, 154 MW Victorian Project, <http://
www.solarsystems.com.au/154MWVictorianProject.html>
Solar Tube Company, 2009, Solar Water Heating System,
<http://www.solartubecompany.co.uk/solar-water-heating/>
Stein W, 2009a, personal communication, 4/8/2009.
Manager, National Solar Energy Centre, CSIRO Division of
Energy Technology
Stein W, 2009b, personal communication, 3/11/2009.
Manager, National Solar Energy Centre, CSIRO Division of
Energy Technology
Sunwize Technologies, 2008, SunWize World Insolation
Map, <http://www.sunwize.com/info_center/solarinsolation-map.php>
Watt M, 2009, National Survey Report of PV Power
Applications in Australia 2008: Australian PV Association
World Energy Council, 2007, Survey of Energy Resources
2007, London, September 2007, <http://www.worldenergy.
org/pugblications/survey_of_energy_resources_2007/
default.asp>
WEC, 2009, Survey of energy resources: Interim update
2009. London, July 2009, <http://www.worldenergy.
org/publications/survey_of_energy_resources_interim_
update_2009/default.asp>
Wyld Group and MMA, 2008, High Temperature Solar
Thermal Technology Roadmap. Prepared for the NSW and
Victorian Governments by Wyld Group and McLennan
Magasanik Associates, <http://www.coag.gov.au/reports/
docs/HTSolar_thermal_roadmap.pdf>
Chapter 11
Ocean Energy
11.1 Summary
Key messages

Ocean energy wave, tide and ocean thermal energy sources is an underdeveloped but
potentially substantial renewable energy source.
Australia has world-class wave energy resources along its western and southern coastline,
especially in Tasmania.
Australias best tidal energy resources are located along the northern margin, especially the northwest coast of Western Australia.
Worldwide, ocean energy accounts for a negligible proportion of total electricity generation. The share
of ocean energy in world electricity generation is projected to increase by 2030, albeit only modestly.
Current ocean energy use is mainly based on tidal power stations. Wave energy technologies are at
early stages of commercialisation and ocean thermal technologies are still at development stage.
Adoption of ocean energy in Australia depends on technologies for tidal or wave energy proving
commercially viable. The cost of access to the transmission grid may also be an impediment for
many sites.
11.1.1 World ocean energy resources

and market
There are substantial ocean (tidal, wave and ocean
thermal) energy resources that have potential for
zero or low emission electricity generation.
Ocean energy industries are at an early stage of
development, and they are currently the smallest
contributors to world electricity generation.
Commercial applications of ocean energy have
been limited to tidal barrage power plants in two
OECD countries, France (240 MW) and Canada
(20 MW), but major new tidal barrage plants are
under construction in the Republic of Korea.
Government policies and falling investment costs
are projected to be the main factors underpinning
future growth in world ocean energy use. World
electricity generation from ocean energy is projected
by the IEA in the reference case to increase at an
and 2030.
11.1.2 Australias ocean energy resources

The northern half of the Australian continental
shelf has limited wave energy resources, but
has sufficient tidal energy resources for local
electricity production in many areas, particularly
the Northwest Shelf, Darwin, Torres Strait and the
southern Great Barrier Reef (figure 11.1).
The southern half of the Australian continental

shelf has world-class wave energy resources
along most of the western and southern
coastlines, particularly the west and southern
coasts of Tasmania (figure 11.2). In contrast, tidal
energy resources are limited in this region.
Areas in the Pacific Ocean are prospective for
ocean thermal energy.

ocean energy resources
Production costs for ocean energy systems
are currently high, but are expected to fall as
technologies mature. The production costs of
ocean energy technologies are estimated by the
IEA to range from US$60 per kW to US$300 per
kW (in 2005 dollars), with tidal barrage systems
at the lower end of this range and tidal current
and wave systems at the higher end.
Given the largely pre-commercial status of the
current ocean energy systems, the outlook is
highly dependent on research, development
and demonstration (RD&D) activities and the
outcomes of these activities, both in assessing
energy potential and developing low-cost energy
conversion technologies.
Government policies that encourage RD&D will be
an important driver of the future development of
ocean energy technologies in Australia.
285
Many of Australias best tidal and wave energy

resources are in areas distant from the electricity
grid. The proximity of the resource to major
population centres and the electricity grid appears
to be somewhat better for wave energy than tidal
or ocean thermal energy.
projects in Australia. If successful, these

projects could lead to commercial scale plants
generating electricity for the grid, for off-grid local
domestic and industrial use, or to power water
desalination plants.
Some of Australias best tidal energy resources

are also located in environmentally sensitive
areas and there are significant environmental
impacts associated with tidal energy systems.

and world market
New tidal technologies based on the use of tidal

currents have environmental advantages over
tidal barrage systems, but, like wave and ocean
thermal energy systems, are still at an early stage
of development.
There are two broad types of ocean energy:

mechanical energy from the tides and waves, and
thermal energy from the suns heat. In this report,
ocean energy is classified as tidal energy, wave
energy and ocean thermal energy. Potential energy
resources associated with major ocean currents,
such as the East Australia Current or the Leeuwin
Current, are not considered here.
11.1.4 Australias ocean energy market

Ocean energy technologies are still at an early
stage of development and have only been used at
a pilot scale in Australia. Four tidal or wave energy
plants, with a combined capacity of less than
1MW, have been developed in recent years.
There are also plans to develop several
commercial scale tidal and wave energy
120
130
11.2.1 Definitions
Tidal energy
Tides result from the gravitational attraction of the
Earth-Moon-Sun system acting on the Earths oceans.
Tides are long period waves that result in the cyclical
140
150
10
DARWIN
286
750 km
20
BRISBANE
30
PERTH
SYDNEY
ADELAIDE
Tidal energy (GJ/m2)
MELBOURNE
2
40
HOBART
AERA 11.1
Figure 11.1 Total annual tide kinetic energy (in gigajoules per square metre, GJ/m ) on the Australian continental
shelf (less than 300 m water depth)
2
Note: The low range of the colour scale is accentuated to show detail. The colour scale saturates at 2 GJ/m2 but the maximum value present
is 195 GJ/m2
C H A P T E R 1 1 : O CEAN ENER GY
rise and fall of the oceans surface together with

horizontal currents. The rotating tide waves result in
different sea levels from one place on the continental
shelf to the next at any one time, and this causes the
water column to flow horizontally back and forth (tidal
currents) over the shelf with the tidal oscillations in
sea level.
Tidal energy is energy generated from tidal
movements. Tides contain both potential energy,
related to the vertical fluctuations in sea level, and
kinetic energy, related to the horizontal motion of
the water column. It can be harnessed using two
main technologies:
Tidal barrages (or lagoons) are based on the
rise and fall of the tides these generally consist
of a barrage that encloses a large tidal basin.
Water enters the basin through sluice gates in
the barrage and is released through low-head
turbines to generate electricity.
Tidal stream generators are based on tidal
or marine currents these are free-standing
structures built in channels, straits or on the
shelf and are designed to harness the kinetic
energy of the tide. They are essentially turbines
120
130
that generate electricity from horizontally flowing

tidal currents (analogous to wind turbines).
Wave energy
Waves (swell) are formed by the transfer of energy
from atmospheric motion (wind) to the ocean surface.
Wave height is determined by wind speed, the
length of time the wind has been blowing, the fetch
(distance over which the wind has been blowing),
and the depth and topography of the sea floor. Large
storms generate local storm waves and more distant
regular waves (swell) that can travel long distances
before reaching shore.
Wave energy is generated by converting the energy
of ocean waves (swells) into other forms of energy
(currently only electricity). It can be harnessed using
a variety of different technologies, several of which
are currently being trialled to find the most efficient
way to generate electricity from wave energy.
Ocean thermal energy

Oceans cover more than 70 per cent of the Earths
surface. The suns heat results in a temperature
difference between the surface water of the ocean
and deep ocean water, and this temperature
difference creates ocean thermal energy.
140
150
10
DARWIN
750 km
20
BRISBANE
30
PERTH
SYDNEY
ADELAIDE
MELBOURNE
Wave energy (TJ/m2)

1.5
HOBART
40
0
AERA 11.2
Figure 11.2 Total annual wave energy (in Terrajoules per square metre, TJ/m ) on the Australian continental shelf
(less than 300 m water depth)
2
287
Ocean thermal energy conversion (OTEC) is a means

of converting into useful energy the temperature
difference between surface water and water at depth.
OTEC plants may be used for a range of applications,
including electricity generation. They may be land
based, floating or grazing.
More detailed information on tidal, wave and ocean
thermal energy technologies is provided in Box 11.2
in section 11.4.
11.2.2 Ocean energy supply chain

Figure 11.3 provides a schematic representation of
the potential tidal, wave and ocean thermal energy
industry in Australia. Ocean energy resources have
the potential to generate electricity using various
types of turbines and other energy converters. The
electricity generated could be used either locally,
or fed into the electricity grid. As well as electricity
generation, some ocean energy resources can be used
for other purposes such as pumping seawater through
desalination plants to generate potable water.
288
The supply of tidal, wave and ocean thermal energy

requires firstly identifying the sites with the best
energy resources matched to the energy converter
technology being considered, so that their potential
for generating electricity can be determined.
Whether or not a potential project then proceeds
to development will require detailed economic
assessment, including factors such as the capital
and operating costs, access to finance, the cost of
grid connection, if relevant, including transmission
distances and associated losses, environmental
and community issues and the price received for the
energy generated.
Development and
Production
11.2.3 World ocean energy market

There is only a small market at present for tidal,
wave and ocean thermal energy. In 2009, commercial
applications were limited to electricity generation
based on tidal energy resources in two countries
(France and Canada) but significant investment in
new tidal energy projects was taking place in the
Republic of Korea. Feasibility assessments and
RD&D investments in ocean energy technologies are
taking place in several countries.
Resources
Tidal energy
The tidal energy resource is vast and sustainable.
However, the economically exploitable resource
is currently small because of the considerable
costs associated with energy extraction and
the environmental impacts of some tidal energy
technologies, notably barrages and lagoons (tidal
pools). There are few estimates of the world tidal
energy resource potential.
Wave energy
The global wave power resource in deep water
(100m or more) has been estimated at 110 TW
and the economically exploitable resource could
be as high as 2000 TWh per year (WEC 2007).
The average annual wave power across the world
is shown in figure 11.4. Some of the coastlines
with the greatest wave energy potential are the
western and southern coasts of South America,
South Africa and Australia. These coasts experience
the waves generated by the westerly wind belt
between latitudes 40 and 50 south, which are
Storage
End Use Market
Development
decision
Industry
Project
Resource definition
and site location for
specific technology
Domestic
market
(proposed)
Electricity
Generation
Commercial
Residential
AERA 11.3
Figure 11.3 Australias ocean energy supply chain

blowing over an effectively infinite fetch. This

produces some of the largest and most persistent
wave energy levels globally.
OTEC may be used in circumstances where there are

temperature differences of at least 20C.
Ocean energy is currently only used to generate

electricity and hence primary energy consumption of
ocean energy is the same as fuel inputs to electricity
generation. World ocean energy use decreased at
an average annual rate of 1.4 per cent between
2000 and 2008, and accounted for only a very small
proportion of total primary energy consumption
At present, it is not possible to quantify ocean thermal

energy resource potential (WEC 2007). Figure 11.5
shows the temperature difference between the
surface water of the oceans in tropical and subtropical
areas, and water at a depth of around 1000 metres
which is sourced from the polar regions (WEC 2007).
120W
60W
60E
27
29
89
40
68
102
28
22
13
17
15
12
45
33
13
10
11
15
16
20
24
18
50
60N
26
41
65
48
38
19
13
11
17
12 9
23
25
72
97
97
34
23
10
40
38
26
43
50
30N
20
14
12
21
66
33
74
34
18
30
5 12 5042
17
15
40
50
24
70
92
12 49
31
33
19
12
38
100
30
49
120E
82
78 75
5000 km
63
84
0
10 29
37 30S
38
72 81
43
42
AERA 11.4
Figure 11.4 Average annual wave power levels (in kW/m)

Source: World Energy Council 2007
120W
60W
22
16
60E
120E
30N
24
20
18
Temperature difference (C)
30S
0
5000 km
AERA 11.5
16
18
20
22
24
Figure 11.5 The areas available for ocean thermal energy conversion (OTEC) and the temperature difference
(measured in C)
Source: World Energy Council 2007
289
tidal energy power plant at Lake Sihwa, near Seoul,

Republic of Korea is commissioned in 2010.
(table 11.1). Tidal energy has been utilised on

a commercial scale to date only in OECD countries.
Canada produced 0.1 PJ (35 GWh) in 2007 and

2008. Canada has a 20 MW tidal barrage power
plant in Annapolis Royal, Nova Scotia, which has
been operating since 1984.
In 2008, 544 GWh (0.5 TWh) of electricity was
generated from ocean (tidal) energy, representing
only 0.003 per cent of world electricity generation
(figure 11.6). Ocean energy has been generated from
tidal energy plants in France and Canada;
Globally, there is significant RD&D activity that will

contribute to the future commercialisation of other
ocean energy technologies. Information on global
RD&D activity is provided in section 11.4.
France, the main ocean energy producing country,

produced 1.8 PJ (512 GWh) commercially in 2007
and 2008. A 240 MW tidal barrage power plant has
been operating at La Rance in France since 1966
and is currently the largest tidal power station in
the world. It will be overtaken when the 260 GW
World ocean energy market outlook

The IEA projects some growth in ocean energy
production over the outlook period to 2030, although
Table 11.1 Key ocean energy statistics

unit
Australia
200708
OECD
2008
World
2008
PJ
2.0
2.0
Share of totalb
0.0009
0.0004
-1.3
-1.4
Electricity output
TWh
0.5
0.5
Share of total
0.005
0.003
GW
0.0008
0.261
0.261
a Energy production and primary energy consumption are identical b Total world primary energy consumption and electricity generation data
are for 2007
Source: IEA 2009a
0.012
0.7
0.6
0.010
0.5
0.008
0.006
0.3
0.004
0.2
0.002
0.1
0
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
Year
France
Canada
Figure 11.6 World wave and tidal electricity generation and share of total electricity generation
Source: IEA 2009a
AERA 11.6
0.4
TWh
290
it is projected to remain the smallest supplier of

electricity. In 2030, ocean energy is projected
to account for 0.1 per cent of OECD electricity
generation and 0.04 per cent of total world electricity
generation (table 11.2).
Most of the growth is projected to occur in the
European Union, which is projected to account for
almost 70 per cent of total ocean energy use in
2030. A further 3 TWh is projected to be generated
in small quantities in the United States, Canada
and the Pacific. Tidal projects currently under
development in the Republic of Korea are planned
to be producing 550GWh in 2010 with potential to
increase significantly beyond that toward the Korean
governments goal of producing 5 TWh using tidal
power by 2020 (IEA 2009b).
ocean energy electricity generation
unit
OECD
Share of total
2007
2030
TWh
12
0.009
0.091
14.3
TWh
0.0
Share of total
0.000
0.005
TWh
13
0.005
0.038
14.6
Non-OECD
World
Share of total
Source: IEA 2009b
11.3 Australias ocean energy

11.3.1 Ocean energy resources
The following discussion focuses on Australias tidal
energy and wave energy resources. There has been
limited progress in assessing Australias ocean
thermal energy resources, not least because of
the greater prospectivity of other renewable energy
resources (WEC 2007).
Tidal energy
Assessment of Australias tidal energy resources
is restricted to the tide kinetic energy present on
Australias continental shelf. Tidal currents off the
shelf are minimal. Moreover, significant transmission
losses would be expected for tidal energy converters
located far from shore. The continental shelf for this
assessment is defined as water depths less than
300 m. Details of the data and methods used in
this assessment and its limitations are described
in Box 11.1.
Indicative values for the mean spring tide range around
Australia are shown in figure 11.7. A variety of tide
energy converters are presently available to generate
electricity. Barrage-type systems require specific coastal

geomorphic settings typically bays or estuaries as
they are designed to harvest the potential energy of
the tide, which depends on both the tide range and
the surface area of the basin (i.e. the tidal prism).
Because of their site-specific requirements and the
complex response of the tide in very shallow water,
it is not practical to undertake a detailed national scale
assessment of the tidal potential energy. Nevertheless,
figure 11.1 identifies in broad terms the regions that
may support tide energy converters of the barrage
type, and therefore highlights where more site-specific
studies could be directed.
Barrage-type tide energy systems generally require
macro-tide ranges (greater than 4 m), which are
restricted to the broad northern shelf of Australia;
from Port Hedland northwards to Darwin and the
southern end of the Great Barrier Reef. Other types
of tidal energy converters (tidal turbines) harness the
kinetic component of tide energy. They are suitable
for installation on the continental shelf, and while
they do not necessarily require highly-specific coastal
configurations they can be deployed in locations
where local coastal configurations result in increased
tidal flows.
The total tidal kinetic energy on the entire Australian
continental shelf at any one time, on average, is
about 2.4 PJ. The total amount of tide kinetic energy
on the shelf adjacent to each state is listed in Table
11.3. Since the tidal movement of shelf waters
occupies the entire water column, the tide energy
adjacent to each state at any one time reflects both
the volume of shelf waters and the current speed of
those waters. Table 11.3 provides some interesting
comparisons, but it is skewed by the North West
Table 11.3 Total tidal kinetic energy (on average at
any one time on the continental shelf adjacent to
each jurisdiction
State/Territory
Total energy (TJ)
Northern Territory
311.63
Queensland
454.19
New South Wales

Victoria and Tasmania
South Australia
1.21
151.41
27.15
Western Australia
1496.33
National Total
2441.92
Note: These data were obtained by taking the time-average of the

1-year time series of tide kinetic energy density available at each grid
point, multiplying by the water depth and multiplying by the area of a
0.1 degree by 0.1 degree quadrant at each grid point, and summing
the results for all grid points across the shelf
291
power on the Australian continental shelf is shown

in figure 11.9. Tidal (kinetic) power is also greatest
on the northern half of the Australian continental
shelf, with many areas having more than 100 Watts
per square metre (W/m2). The southern half of the
Australian shelf (with the exception of Bass Strait)
has relatively little tidal kinetic energy or power
(figures 11.8 and 11.9). The tidal kinetic energy
delivered in a given time period, for example, in
one year (total annual tidal kinetic energy), can be
obtained by integrating the tidal (kinetic) power time
series over one year.
Shelf region, where there is a large energy density

due to the tide range and a large volume of water
mobilised by the tide. There are numerous other
locations on shallower or narrower regions of shelf
where the total tide kinetic energy is considerably
less, but still more than enough for the purpose of
electricity generation (e.g. Darwin, Torres Strait and
Bass Strait).
The spatial distribution of time-averaged tidal kinetic
energy density on the Australian continental shelf is
shown in figure 11.8. Consistent with the tide ranges
shown in figure 11.7, the regions of shelf that have
the largest kinetic energy densities are the North West
Shelf and the southern shelf of the Great Barrier
Reef, with large areas having densities of more than
100Joules per cubic metre (J/m3). Darwin, Bass
Strait and Torres Strait have localised areas with
similar energy densities, despite more modest tide
ranges (figure 11.8). This is due to the convergence
and acceleration of tidal streams on the shelf
between the islands and mainland.
The spatial distribution of total annual tide kinetic

energy is shown in figure 11.10. This annual resource
is expressed in GJ/m2 of tidal flow. In principle, the
total annual tidal kinetic energy adjacent to each
state could be estimated by integrating with respect
to the cross-sectional area, but in practice the result
depends on where the cross-section is drawn.
The estimated maximum time-average tidal (kinetic)
power occurring on the shelf adjacent to each state
is listed in table 11.4. The mean as well as the
10th, 50th, and 90th percentile power at that
location is listed together with the total tidal kinetic
The rate of delivery of tidal kinetic energy, or energy

flux, is also referred to as tidal (kinetic) power. The
spatial distribution of time-averaged tidal (kinetic)
120
130
2.9
140 3.2
2.8
2.5
5.5
292
6.6
150
DARWIN
10
1.6
1.7
9.2
1.6
750 km
1.5
1.8
8.2
2.4
3.6
4.9
20
8.2
1.8
3.3
1.1
BRISBANE
1.7
0.5
0.5
1.2
PERTH
0.7
1.2
1.0
2.0
0.4
SYDNEY
ADELAIDE
30
1.2
1.3
1.7
MELBOURNE 1.1
0.6
0.6
2.6
2.0
1.1
3.2
40
HOBART
0.8
AERA 11.7
Figure 11.7 Tide ranges (in metres) for the main standard ports around Australia
Source: Australian National Tide Tables; Australian Hydrographic Service
energy delivered annually. In all cases the maximum

tidal power occurs is in water depths less than or
equal to 50 m, which in all likelihood is the depth
range in which the present generation of tidal energy
converters could be installed.
The best resourced jurisdictions are Western
Australia, Queensland and the Northern Territory.
Western Australia has locations off its coast where
the average tidal (kinetic) power in water depths less
than or equal to 50 m exceed 6.1 kW per square
metre (KW/m2), delivering a total tidal kinetic energy
of over 195 GJ/m2 annually.
Wave energy
Previous studies of Australias wave climate have
focused mainly on the energetic south-western,
southern and south-eastern margins of the continent,
but there has been no previous publicly available
comprehensive national assessment of Australias
wave energy resources. The wave energy resource
assessment presented here is based on wave data
hindcast by the Bureau of Meteorology at 6-hourly
intervals over an eleven year period from 24 090
locations evenly distributed over Australias entire
120
130
continental shelf (Hasselmann et al. 1988). The

assessment methodology is described in more detail
in Box 11.1.
Several types of wave energy converters are
presently available to generate electricity. The choice
of converter technology places limits on the locations
from which wave energy can be harvested. For
example, the Pelamis device is capable of generating
electricity in water depths of 60 to 80 metres,
whereas CETO is suited to shallower water depths
(15 to 50 metres). Given these considerations,
and the transmission losses expected if a wave
energy converter is too far from shore, this resource
assessment is restricted to the wave energy present
on Australias continental shelf. The shelf is defined
here as water depths less than 300 metres. The
spatial distribution of time-averaged wave energy
density on the Australian continental shelf is shown
in figure 11.11. The northern Australian shelf (i.e.
above latitude 23 degrees south) is characterised
by relatively low wave energy densities of generally
less than 2.5 kJ/m2. The southern Australian shelf,
on the other hand, is characterised by energy
140
150
10
DARWIN
750 km
20
BRISBANE
30
PERTH
ADELAIDE
Tidal energy density (J/m3)
SYDNEY
MELBOURNE
100
40
HOBART
AERA 11.8
Figure 11.8 Spatial distribution of time averaged tidal kinetic energy density on the Australian continental shelf
(not depth integrated). The energy density at each location represents the average over any one year in J/m3.
Note that the colour scale saturates at 100 J/m3 to show detail; the maximum value present is 2696 J/m3
293
Box 11.1 Details of assessment methods, data and analysis: tidal and wave energy
Tidal energy
There are no previous national assessments of
Australias tidal energy resource publicly available
(although CSIROs Marine and Atmospheric Research
unit has work in progress). This assessment of
Australias tide energy resource is based on the
mean spring tidal ranges calculated using the
Australian National Tide Tables produced by the
Australian Hydrographic Service (2006) together with
the depth-averaged tidal current speed predicted
using a hydrodynamic model. Tidal currents are one
component of Geoscience Australias GEOMACS
Model (Geological and Oceanographic Model of
Australias Continental Shelf). A full description of the
tide component of the model is presented in PorterSmith et al. (2004).
294
Tidal water levels at a given site are highly

predictable, provided more than a year of
measurements is available. The tidal ranges
presented in figure 11.7 are all from standard
ports with long-term tide gauges installed, and
are therefore considered sufficiently reliable for
use in the resource assessment. The prediction
of tidal water levels at sites where no tide gauge
measurements exist is less straightforward.
The accuracy then depends on the nature of the
hydrodynamic model used and the complexity of the
shelf and coastal bathymetry. Predictions of tidal
currents are even more sensitive to these natural
complexities. The hydrodynamic model used in this
assessment to predict tidal current speeds, and
ultimately tidal kinetic energy and power, provides
reasonable, but at best approximate and as yet
unsubstantiated, estimates of current speed on the
shelf. However, it produces somewhat less adequate
results in areas such as elongated coastal bays and
in narrow seaways between islands and between
islands and the mainland. The predictions for tidal
kinetic energy and power in King Sound, Western
Australia, for example, are small, yet this is where
the largest tides in Australia occur (figure 11.11).
Overall, the tidal energy resource assessment
presented here is acceptable as a first-estimate at
the national scale. It indicates the relative importance
of regions, but it cannot be considered accurate at a
regional or local scale and it cannot be relied upon to
any degree other than on the open shelf. There is a
need to develop a new, national scale hydrodynamic
model, based on the latest available national
bathymetric grid and verified by satellite altimetry,
oceanographic moorings, and tidal stream data.
Regional scale hydrodynamic models suitable for
elongate coastal bays and convoluted coastlines need
to be developed for detailed site assessment.
Wave energy
The data used to undertake the wave energy
resource assessment are wave conditions
hindcast using the WAM Model a third generation
ocean wave prediction model (Hasselmann et al.
1988) implemented by the Australian Bureau of
Meteorology. The hindcast wave data from the WAM

model were converted to wave energy and power
(energy flux) using linear wave theory for arbitrary
depth. Details of the methods used are discussed in
full in Hughes and Heap (2010). The Australian WAM
model grid has a resolution of 0.1 degree and the
resolution for significant wave height in the hindcast
wave data is 0.1 metre. The accuracy varies with
conditions, but is nominally 0.25 metre for wave
heights in the range used for electricity generation.
The resolution of the wave period is 0.1 second and
the accuracy is nominally 1 second. This equates to
a percentage range of uncertainty in the calculated
wave energy density and power of 100 per cent or
more for small wave heights (less than 1 metre), but
decreasing rapidly to 17 per cent or less for larger
wave heights (greater than 6m). In essence, the
percentage uncertainty is least for the southern half
of Australias continental shelf where the resource is
of most promise.
The results of this assessment appear broadly
consistent with those of a study of Australias
wave energy resource by RPS MetOcean for the
Carnegie Corporation (now Carnegie Wave Energy
Limited), an extract of which was published in the
Corporations 2008 Annual Report. The MetOcean
wave energy resource assessment concluded that,
on the southern half of Australias shelf, there is an
estimated resource of 525 000 MW in deep water
and 171 000 MW in shallow water (a depth of less
than 25 metres) (Carnegie Corporation 2008). The
MetOcean rankings of each jurisdictions resource
are also consistent with the relative magnitudes of
values in tables 11.5 to 11.6, but cannot be directly
compared because their data are presented in
different units of measurement.
Overall, the wave energy resource assessment
presented here is considered to be sufficiently
reliable as a national scale assessment. It is best
suited to water depths greater than 25 m. In water
depths less than 25 m the WAM model does not
sufficiently account for shallow water processes
(e.g. friction effects and refraction) that dissipate or
redistribute the wave energy. Given that many of the
current technologies are designed for deployment
in water depths of 25 m or less, and some on the
shoreline, a more refined assessment is warranted.
This would involve:
1. using the spatially limited waverider buoy data to
verify/calibrate the WAM Model data, providing a
more accurate data set with complete coverage
of the shelf.
2. Integrating geographic information layers such
as bathymetry, seabed type (gravel, sand, mud,
reef), and coastal geomorphology into a GIS
together with the wave climatology to identify the
accessible resource. This integrated approach
will have a strong influence on determining
whether a site is suitable for a wave farm,
irrespective of the wave climate.
densities of more than 2.5 kJ/m2, with large areas of

the shelf experiencing twice this value (e.g. western
and southern Tasmania). Much of the southern
Australian coastline experiences significant wave
heights (in excess of 1 m) virtually all of the time.
The total wave energy on the entire Australian
continental shelf at any one time, on average,
is about 3.47 PJ. The total amount of wave energy
on the shelf adjacent to each state is listed in
120
table 11.5. The wave energy adjacent to each

jurisdiction at any one time reflects both the area
of shelf waters and the energy density in those
waters. For example, Victoria and Tasmania have,
on average, about the same total wave energy as
the Northern Territory; however, it is concentrated
in a smaller shelf area.
The shelf waters off Victoria and Tasmania are suitable
sites for harvesting wave energy, whereas the shelf
130
140
150
10
DARWIN
750 km
20
BRISBANE
30
PERTH
ADELAIDE
SYDNEY
MELBOURNE
Tidal power (W/m2)

100
40
HOBART
AERA 11.9
Figure 11.9 Spatial distribution of time-averaged tide (kinetic) power (W/m ) on the Australian continental shelf
(not depth integrated). The (kinetic) power at each location represents a time-average over any one year. Note that
the colour scale saturates at 100 W/m2 to show detail; the maximum value present is 6179 W/m2
2
Table 11.4 Mean and percentiles of tide (kinetic) power (W/m2) and total tide kinetic energy delivered annually
(GJ/m2) on the continental shelf adjacent to each state
Jurisdiction
Power (W/m2)
10th percentile
50th percentile
Northern Territory
2069.50
18.07
1029.68
5979.38
65.45
Queensland
4153.19
33.97
2316.85
10679.20
131.35
0.36
0.024
0.19
0.96
0.0011
488.93
6.03
378.06
1193.56
15.46
South Australia
317.16
0.43
78.86
1014.65
10.03
Western Australia
6179.39
249.42
7529.65
10679.20
195.43
New South Wales
90th percentile
Energy (GJ/m2)
mean
295
waters off the Northern Territory are not suitable,

at least with existing technology. Consideration must
also be given, however, to the rate at which useful
energy can be delivered. In the case of tidal and wave
energy resources, the lack of control over the timing,
rate or level of delivery can impact significantly on
their potential as an electricity source.
Table 11.5 Total wave energy (on average at any one
time) on the continental shelf adjacent to each state
Jurisdiction
Total energy (TJ)
Northern Territory
458.20
Queensland
805.04
New South Wales
69.53
485.49
South Australia
631.62
Western Australia
1018.10
National Total
3467.98
Note: These data were obtained by taking the time-average of the 11year time series of wave energy density available at each grid point,
multiplying by the area of a 0.1 by 0.1 degree quadrant at each grid
point, and summing the results for all grid points across the shelf
120
The rate of delivery of wave energy, or energy flux,

is also referred to as wave power. The spatial
distribution of time-averaged wave power on the
Australian continental shelf is shown in figure 11.12.
Wave power is also greatest on the southern half
of the Australian shelf, with 2535 kW/m being
common on the outer shelf. Despite the fact that
there is a considerable amount of energy on the
northern half of the Australian shelf at any one time
due to the large shelf area (table 11.6), the energy
density and power or rate that the energy is delivered
is small (figures 11.11 and 11.12). For example,
wave power off the Northern Territory shelf is typically
less than 10 kW/m and unsuitable for harvesting
with current technologies.
The spatial distribution of total annual wave energy
(the total wave energy delivered in a year) is shown
in figure 11.13. This annual resource (expressed in
joules per metre), is the theoretical total annual wave
energy available along a line orthogonal to the wave
direction. In practice, the result depends on where
130
140
150
10
DARWIN
296
750 km
20
BRISBANE
30
PERTH
ADELAIDE
MELBOURNE
Tidal energy (GJ/m2)

2
SYDNEY
Work in progress
Transmission lines
Existing and proposed tidal project
40
HOBART
AERA 11.10
Figure 11.10 Spatial distribution of total annual tide kinetic energy on the Australian continental shelf (less than
300 m water depth), with existing and proposed projects
Note: The kinetic energy at each location represents the total delivered in a year. Data obtained from a linearised, shallow tide model.
The colour scale saturates at 2 GJ/m2 to show detail; the maximum value present is 195 GJ/m2
the line is drawn. Generally, the further offshore the

line is drawn the greater the total energy resource
available, because waves lose energy and power as
they approach the coast.
differences between the two are more pronounced

in New South Wales, Victoria and Tasmania.
On the basis of the assessment summarised in
table 11.6, the states with the best wave energy
resource are Western Australia, South Australia,
Victoria and Tasmania. Tasmania is particularly
well endowed with wave energy resources. There
are locations off its coast where the average wave
power in water depths less than or equal to 50m
reach almost 35 kW/m, delivering a total wave
energy of 1100 GJ/m annually.
The energy and power available for water depths less

than or equal to 50 m (at which current generation
energy converters predominate) are listed in table
11.6. Both the power and the total annual energy
available in the less than or equal to 50m depth
range are generally slightly smaller than the total
energy and power available in deeper water. The
130
120
140
150
10
DARWIN
750 km
20
BRISBANE
297
30
PERTH
SYDNEY
ADELAIDE
MELBOURNE
Wave energy density (kJ/m2)

7
HOBART
40
0
AERA 11.11
Figure 11.11 Spatial distribution of time-averaged wave energy density on the Australian continental shelf, in kJ/m2.
The energy density at each location represents the average of the available 11-year time series from March 1997 to
February 2008
Table 11.6 Mean and percentiles of wave power (kW/m) and total energy (GJ/m) delivered annually in water
depths equal to or less then 50 m
Jurisdiction
Power
Energy
mean
10th percentile
50th percentile
90th percentile
mean
Northern Territory
5.32
0.33
2.68
13.09
167.90
Queensland
14.72
3.52
9.03
29.82
442.80
New South Wales
13.61
2.77
7.31
27.19
391.04
34.87
4.88
18.22
70.66
1100.80
South Australia
25.51
4.28
15.35
54.96
885.13
Western Australia
26.38
4.65
15.05
56.86
901.44
11.3.2 Ocean energy market

In Australia, four electricity generation units based
on either tidal or wave energy have been developed
in recent years (table 11.7). All four units are pilot or
demonstration plants with capacities of less than 0.5
MW. These four projects have collectively added less
than 1 MW of generating capacity, but they represent
an important stage in the technology innovation
process for ocean energy in Australia.
Carnegie Wave Energy Limited (formerly Carnegie
Corporation) holds the intellectual property and
global development rights for the Cylindrical Energy
Transformation Oscillator (CETO) wave energy
converter (see Box 11.2 for a technology description).
Carnegie completed the CETO 2 pilot test (proof of
concept) at Fremantle and in late 2009 announced
plans for a demonstration project (box 11.3).
Oceanlinx has had a 500 kW prototype oscillating
water column wave power unit (box 11.2) at Port
Kembla, New South Wales since 2006. This unit
is currently being replaced by a third generation
demonstration scale device designed to suit the
120
130
environment at Port Kembla and is due to be

commissioned in early 2010. Oceanlinx is also
developing a large scale demonstration project (up
to 2.5 MW per wave energy converter) at Portland,
Victoria (www.oceanlinx.com).
The most recent ocean energy project based on
tidal energy began operations in 2008. The 150
kW tidal plant was installed by Atlantis Resources
Corporation at Phillip Island (south of Melbourne)
(www.atlantisresourcescorporation.com).

Australias ocean energy
Ocean energy resources have significant potential
for future utilisation but are at an early stage of
development and have yet to be demonstrated
to be a commercially viable option for electricity
generation in Australia. However, given the
level of global RD&D activity, it is possible that
technological and economic advances will increase
the commercial attractiveness of ocean energy.
140
150
10
DARWIN
298
750 km
20
BRISBANE
30
PERTH
ADELAIDE
SYDNEY
MELBOURNE
Mean wave power (kW/m)

50
40
HOBART
0
AERA 11.12
Figure 11.12 Spatial distribution of time-averaged wave power on the Australian continental shelf (kW/m).
The wave power at each location represents a time-average of the available 11-year time series from March
1997 to February 2008

development of Australias ocean resources
project at Portland. The grant was funded from the

Renewable Energy Demonstration Program.
Australia has a significant potential ocean energy

resource, especially along its western, northern
and southern coastlines if both waves and tides
are considered. Government policies such as the
expanded Renewable Energy Target (RET) and the
proposed emissions reduction target could contribute
to a more favourable environment for ocean energy
resource development. There has also been direct
government funding for ocean energy: Victorian
Wave Partners obtained a $66 million grant from
the Australian Government towards the cost of a
19MW commercial-scale wave power demonstration
Despite its potential, there are significant constraints

on the future development of ocean energy in
Australia. Two limitations in particular need to
be addressed: technologies for the commercial
conversion and utilisation of ocean energy are
still immature; and capital costs, including grid
connection, are high relative to other energy sources.
A number of technologies have passed proof-ofconcept stage but many are yet to deliver electricity
to a grid. Some of them have reached the commercial
scale demonstration stage and may be in commercial
operation by mid-this decade, but they will still be in
130
120
140
150
10
DARWIN
750 km
20
299
BRISBANE
30
PERTH
SYDNEY
ADELAIDE
MELBOURNE
Wave energy (TJ/m)

1.5
Transmission lines
Existing and proposed
wave energy projects
40
HOBART
0
AERA 11.13
Figure 11.13 Total annual wave energy on the Australian continental shelf (water depths less than 300 m) and
wave energy projects (TJ/m). The total annual wave energy at each location represents an average of the 11 years
from March 1997 to February 2008
Table 11.7 Ocean energy pilot and demonstration plants in Australia

Project
Company
State
Start up
Capacity
Portland (wave energy)
Ocean Power Technologies and

Powercor Aust
VIC
2002
0.02 MW
Fremantle (wave energy)
Carnegie Wave Power Ltd
WA
2005
0.1 MW
Port Kembla (wave energy)
Oceanlinx
NSW
2006
0.5 MW
San Remo (tidal energy)
Atlantis Resource Corporation
VIC
2008
0.15 MW
competition with other in some cases more mature

and lower cost renewable energy technologies.
Ocean energy provides a low emissions

source of energy with potential for base load
Ocean energy is a relatively predictable, and
therefore a potentially attractive source of electricity,
generated with low greenhouse gas emissions. The
reliability of some forms of ocean energy such as
ocean thermal may make it potentially suitable for
base load electricity generation. Other forms of ocean
energy, such as tidal energy, while not consistent in
providing energy, can be accurately predicted, and
therefore, should facilitate grid integration:
Tidal energy is very predictable, but cannot be
used to generate electricity at consistent levels
constantly. Twice in every 12.42 hours (24 hours
in some locations) the tidal current speed and
hence the electricity generation capability falls
to zero. If tidal energy is required to produce a
sustained base load for the local grid, some form
of energy storage or back-up will be needed.
300
Waves are rarely of consistent length or strength.

Wave energy levels may vary considerably from
wave to wave, from day to day, and from season
to season, because of variations in local and
distant wind conditions. This inherent variability
needs to be converted to a smooth electrical
output to be a reliable source of electricity supply.
Moreover, there are sites on the western and
southern coastlines where regular storms in
the Southern Ocean generate consistent swells
with periods of wave energy failure both of
low frequency and short duration. Higher level
forecasting, grid management or possibly energy
storage systems are needed to smooth out such
peaks and troughs in supply.
Ocean thermal energy is potentially suitable for
base load electricity generation, as the ocean
temperatures on which it relies show only slight
variation between seasons (WEC 2007).
RD&D activity is critical for the future

development of ocean energy resources
Despite the large potential ocean energy resource,
the low level of market uptake can be largely
attributed to the currently immature extraction
technology and the large number of different
technologies being trialled. Tidal current systems
are converging on a few different converter designs;
for other forms of ocean energy, there has so far
been no such convergence:
Tidal energy technologies tidal energy
extraction technology is essentially analogous
to that of wind energy. Both require a passing
current to drive a rotating turbine. Tidal
energy turbines are subject to less turbulent

environments than wave energy.
Wave energy technologies Many different wave
energy converters are at the prototype stage and
are undergoing trials in a number of countries.
This is partly explained by the need to develop
technologies for a range of different wave energy
environments and climatic conditions, including
the ability to survive significant storms, and by
the lack of individual technologies that have been
shown to be commercially viable.
Ocean thermal energy technologies ocean
thermal energy conversion technologies are
relatively new and still need to be proven in pilot
scale and demonstration scale plants. Landbased, floating and grazing plants are all options.
OTEC is best suited to tropical waters with warm
surface waters.
Currently, 25 countries are participating in the
development of ocean power, with the United
Kingdom leading the development effort, followed
by the United States, Canada, Norway, Australia and
Denmark. In Portugal three Pelamis wave energy
converters with a combined capacity of 2.25 MW
have been trialled, but are currently not in use.
Although there is potential energy from other
ocean sources, current ocean power development
efforts have focussed on tidal and wave energy
(IEA 2009c).
Tidal energy
At least nine countries outside Australia have a
demonstrated interest in tidal energy for commercial
electricity generation (table 11.8). All of these
countries provide support for R&D in universities
and/or government-funded research institutes; the
R&D commitment extends to the commercial sector
in eight of the countries. There are full-scale plants
currently operating in three countries. In addition,
in 2009 a 1 MW tidal plant was commissioned in
the Republic of Korea and the 260 MW tidal plant
utilising an existing sea wall at the entrance to
Lake Sihwa is under construction. The project will
create environmental flows for the lake. A major tidal
development project has also been advanced for
the Severn River in the United Kingdom, based on a
series of three proposed barrages and two lagoons.
Wave energy
A significant number (at least 20) of countries,
including Australia, have demonstrated an
interest in wave energy for commercial electricity
generation (table 11.9). All but Spain are involved
in R&D in universities and/or government-funded
research institutes; the R&D commitment extends
to the commercial sector in 14 of the countries.
Currently operating full-scale projects, albeit at the

demonstration stage, exist in 10 countries outside
Australia. The size of these current projects range
from small plants of hundreds of kilowatts in size,
to the largest being the 2.25 MW Aguadoura Wave
Park near Pvoa de Varzim in Portugal. This project,
and its proposed expansion to 21 MW, have been
suspended pending resolution of technical issues
and obtaining new financing. A 4 MW wave farm is
planned for Siadar on the Isle of Lewis in Scotland.
A more substantial project, The South-west Region
Development Authoritys Wave Hub in Cornwall, is
well advanced in organisation of a 20 MW wave
energy array, involving a number of technology
suppliers each installing 45 MW systems. OPT,
which as a member of Victorian Energy Partners, is
developing a demonstration project at Portland with
the Australian Governments assistance, is the first
technology supplier engaged to install generators at
the Cornwall Wave Hub.

An important focus in RD&D activity, particularly in
Europe, is the combination of OTEC technologies
with other deep water applications, such as potable
water production, that result in benefits in addition
to electricity generation (WEC 2007). Three major
studies in Europe (European Commission, Maritime
Industries Forum and UK Foresight) have resulted in
recommendations for both OTEC and other deep water
energy applications that emphasised funding and
construction of a plant in the 510 MW range.
A demonstration plant with a capacity of 11.2MW
planned for construction in Hawaii is awaiting
government approval following completion of an
environmental impact assessment. Plans for 10 and
25 MW ocean thermal energy projects are being
considered (WEC 2008).
R&D on OTEC and other ocean energy technologies
has been undertaken since 1974 by a number of
organisations in Japan. Saga University conducted the
first OTEC electricity generation experiments in late
1979 and more recently has been collaborating with
the National Institute of Ocean Technology of India on
a 1 MW plant off the Indian coast (WEC 2008).
Ocean energy technologies are expected

to be relatively high cost options until
technologies mature
Given the largely pre-commercial status of the
current ocean energy industries, the outlook is highly
dependent on the amount of resources devoted
to RD&D, and the potential for cost reduction over
time. This includes RD&D activity both in surveying
techniques to assess energy potential and energy
conversion technologies.
Table 11.8 Country involvement in tidal energy R&D

and/or with full scale plant
Country
Govt and
Academic
R&D
Commercial
R&D
Currently
Operating
Projects
Canada
China
France
India
Republic
of Korea
Under
construction
Norway
Russian
Federation
United
Kingdom
United
States of
America
Note: Table may not include all projects, especially smaller R&D
projects, but includes the main countries involved
Source: IEA 2009c
Table 11.9 Country involvement (other than Australia)

in wave energy R&D and/or with full-scale projects
Country
Govt and
Academic
R&D
Commercial
R&D
Canada
China
Denmark
Finland
France
Germany
Greece
India
Ireland
Japan
Mexico
Netherlands
New Zealand
Norway
Portugal
Spain
Currently
Operating
Projects
301
Sri Lanka
Sweden
United
Kingdom
United
States of
America
Source: IEA 2009c
Investment costs are currently lower for tidal barrage

systems than for tidal current or wave systems.
Investment costs for tidal barrage systems are
estimated to have been US$24 million per MW
in 2005, while investment costs for tidal current
and wave systems are estimated to have been
US$710 million per MW and US$615 million per
MW, respectively (IEA 2008). Shoreline installations
and tidal barrage systems typically have a lower
production cost than deep water devices, but most
deep water technologies are still at the R&D stage.
However, wave energy technologies tend to have
higher costs because of unscheduled maintenance
caused by storm damage.
Ocean energy technologies are expected to remain
relatively high cost options for development in the
medium term.
300
250
2005 US$/kW
302
Investment and production costs for ocean energy

systems are projected to fall over time. They are
projected to fall more significantly for wave energy
systems than for tidal barrage systems as wave
technologies are currently less mature. Tidal barrage
systems currently have the lowest production cost
of all ocean energy technologies. Tidal barrage
production costs were estimated to have ranged
from US$60 to US$100 per kW in 2005, while the
production cost of tidal current systems is estimated
to have been US$150200 and the production cost
of wave energy systems to have been US$200300
(IEA 2008). As the relatively newer wave and tidal
current technologies mature, the difference between
the production costs of these technologies and tidal
barrage systems is projected to fall. By 2030, the
production costs of ocean energy technologies are
projected to range from US$45 to US$100 per kW
(in 2005 dollars) (figure 11.14).
200
150
100
50
AERA 11.14
0
2005
Tidal barrage
2030
Year
Tidal current
Figure 11.14 Ocean energy production costs

Source: IEA 2008
2050
Wave
Australias population is mainly located in

coastal areas, but grid access may be a
significant issue for more remote future
ocean energy projects
Tidal energy
The best tidal energy resources tend to be located
off the more remote coastlines along the northern
margin of Australia. With the present technology
constraints, the most suitable sites for harvesting
with good access to the electricity grid favour only
a few regional centres, although there are large
resources within reasonable proximity to the major
centres of Darwin and Mackay. The domestic demand
for electricity is relatively small in the very wellresourced areas of the Kimberley and Pilbara, but
tide generated electricity could potentially contribute
to the energy requirements of the mining sector.
The environmental impact of a barrage-type
power station may not be acceptable in these
environmentally sensitive regions. However,
there is the potential for converters that harvest
kinetic energy from tidal currents with much lower
environmental impact. The 1.2 MW tide turbine being
installed at Koolan Island will meet up to 20 per
cent of the power needs of the mining operations at
Koolan Island when operational in 2010 (box 11.3).
In general, however, the industrial loads of remote
mining operations are commonly serviced by gasfired generators. New renewable energy options such
as tidal or wave, in the absence of capital grants or
other subsidies such as feed-in tariffs, will need to
compete with the prevailing, long-run, marginal cost
of gas generation.
Wave energy
The best wave energy resources tend to be located
off the more remote coastlines along the southern
margin of Australia. With the present technology
constraints, the most suitable sites for harvesting
with access to the electricity grid favour only a
few regional centres. This may change in time if
the current small-scale projects of 0.5 MW to 1
MW evolve into significant projects of 100 MW or
more, and the possibility of connecting over longer
distances to the grid or expanding the grid to take
advantage of this resource is demonstrated to be
economic.
Ocean energy is a zero or low emissions

renewable resource, but other environmental
impacts also need to be assessed
Electricity generation from wave or tidal energy
produces no greenhouse gas emissions; however,
emissions associated with the production of the wave
or tide energy device and other environmental issues
must also be taken into account.
Tidal barrages disrupt the surrounding environment

more than other tidal or wave energy systems. Tidal
barrages reduce the range of tides that occur inside
the barrage. This may have negative impacts on
water quality and biodiversity in the surrounding area
and cause loss of habitat where intertidal zones are
reduced in area (IEA 2008). Offshore tidal or wave
energy projects typically have a lower impact on the
environment. However, offshore systems may pose
a navigation hazard, and therefore must be located
in areas that are not heavily navigated. There may
also be potential conflicts with other local uses of
the marine area and a possible impact on migrating
marine mammals. The extent of the potential impacts
will depend on the type of wave energy converter
technology; undersea technologies tend to have
less impacts.
Wave and tidal energy systems located near the
shoreline may be objected to by nearby communities
on the grounds of noise and possibly visual pollution.
This may result in public opposition to projects,
particularly if they are located in populated areas.
11.4.2 Outlook for ocean energy resources

Wave and tidal energy are non-depletable resources;
increased use of the resources does not affect
resource availability. However, estimates of
resource availability may change over time as new
measurement methods become available. In addition,
the quantity of the resource that can be utilised will
change over time as new technology developments
allow increased exploitation of ocean resources.
The tidal energy resource assessment presented
in Section 11.3.1 suggests that there is future
development potential, largely on the northern half
of Australias continental shelf and particularly
in King Sound and the Bonaparte Gulf (Western

Australia), Darwin (Northern Territory), the Torres
Strait and southern parts of the Great Barrier Reef
(Queensland). The quality of the resource is spatially
variable, but also highly predictable once field
measurements of one years duration have been
obtained for a site. The suitability of sites will also
be influenced by water depth and seabed type, which
affect the engineering of tide energy converters and
placement of cables across the seabed.
The wave energy resource assessment discussed
in Section 11.3.1 suggests that there is future
development potential across the southern half of
Australias continental shelf from Exmouth around
to Brisbane. The quality of the resource is variable,
with the failure rate of the waves to deliver sufficient
energy and the frequency of failures generally
increasing in the more northerly waters. There may
also be strong local variability in both the resource
and its accessibility; the latter being determined by
requirements for particular water depths and seabed
types for installation of the wave energy converters
and networks of pipe or cable across the seabed.
11.4.3 Outlook for ocean energy market

The major ocean energy developments occurring in
Australia are focussed on proving up technologies
for tidal or wave energy. Several companies have
plans for pilot and demonstration plants (box 11.3).
Importantly for the future of the ocean energy
industry, companies are now investing in commercial
scale power projects. This is an essential step in
demonstrating the technical and economic viability
of these technologies. Early demonstration of
the commercial viability of these or comparable
technologies could well accelerate the development
of wave and tide energy in Australia.
Box 11.2 Current ocean energy technologies
Tidal energy technologies
The design of underwater turbines has advanced

considerably in recent years, but there is still
considerable research and development seeking to
maximise efficiency and robustness while minimising
overall size (figure 11.15).
high tide the sluice gates are closed, thus trapping a

large body of water (figure 11.15). As the water level
on the ocean side of the barrage falls with the ebbing
tide, the elevated water from behind the barrage is
released through the sluice gates, where turbines
are located, to generate electricity. The principle is
similar to hydro-electric schemes on dammed rivers.
More complicated systems of basins and barrages
can be designed to generate electricity on both the
ebbing and flooding tide. The potential energy that is
available to be harnessed is related to the vertical
tide range and the horizontal area of the basin
(the tidal prism).
Barrages harness some of the potential energy of the

tide. In essence, a barrage with sluice gates allows
water to enter the basin on the rising tide, and at
Tidal stream generators focus on the kinetic

energy component of the tide. A turbine is placed
within a tidal current and the kinetic energy
The rotating tide waves result in different sea levels

from one place on the shelf to the next at any one
time, and this causes the water column to flow
horizontally back and forth (tidal currents) over the
shelf with the tidal oscillations in sea level. Two
different technologies have been developed to
harness these tidal movements.
303
associated with the horizontal motion of the

water drives the turbine to generate electricity.
There are turbines developed for relatively shallow
water installation that rotate in a vertical plane,
and others that rotate in a horizontal plane.
The first and still the largest tidal power station was
built on the Rance River estuary in France, between
1961 and 1966. It has been operating continuously
since then. It is a barrage-type system consisting
of an 800-metre long dam enclosing a basin with
a surface area of 22.5 km2. The spring tide range
is up to 13 m. The plant has a power generating
capacity of 240 MW and it delivers 2.3 PJ of energy
annually to the grid (World Energy Council 2007).
A smaller barrage-type station at Annapolis, on the
Bay of Fundy, Canada was completed in 1984. The
tide range in this location can exceed 12 m (Pugh
2004). This plant has a power capacity of 20 MW
and delivers 108 TJ annually. The Republic of Korea
is currently building the largest barrage-type power
station (260 MW) at Sihwa Lake with completion due
this year. China has seven small barrage-type power
stations with a total capacity of 11 MW, and plans for
more. India also has plans for a barrage-type power
station (World Energy Council 2007).
304
Power stations seeking to harness the kinetic energy

of tidal currents are presently much smaller, and still
in the developmental phase. Norway has the first grid
connected underwater turbine located at Kvalsundet,
which has a 300 kW power capacity (World Energy
Council 2007). There are similar pilot projects in the
Russian Federation, the United Kingdom and the
United States.
Wave energy technologies

To operate efficiently a wave energy converter must
be tuned for the modal wave energy conditions, but
also designed and engineered to withstand extreme
energy conditions. This poses a significant challenge,
because it is the lower energy levels that produce

the normal output, but the capital cost is driven by
the design standard necessary to withstand extreme
waves (WEC 2007). There are a large number of
designs for wave energy converters. For the most
part, they can be broadly grouped into one of four
types (table 11.10).
Oscillating water columns (OWCs) consist of a semienclosed air chamber that is partially submerged
(figure 11.16). The passage of waves past the
chamber causes the water level inside the chamber
to rise and fall, and the oscillating air pressure drives
air through a turbine to generate electricity. OWCs
have been developed for installation on the shoreline,
in shallow water resting on the seabed, and in deep
water mounted on a surface buoy.
Hinged (and similar) devices are submerged units
that consist of a paddle or buoy that oscillates with
the passage of waves (figure 11.16). Both the Oyster
and CETO use this motion to pump high pressure
water ashore. The intention is for this water to be
pushed through turbines located onshore for electricity
generation. The water can also undergo reverse
osmosis to produce potable water. These examples
have passed proof of concept, delivering high pressure
seawater ashore. However, there have been no
projects that have delivered electricity to the grid.
Overtopping devices are designed to cause ocean
waves to push water up to a reservoir situated above
sea level, from which the water drains back to sea
level through several turbines (figure 11.16). These
devices have been designed for installation on both
the shoreline and offshore.
Of the remaining types, the Pelamis wave energy
converter consists of two or more cylindrical sections
linked together (figure 11.16). The passage of waves
causes the sections to undulate, and the movement
at the hinged joints is resisted by hydraulic cylinders
Table 11.10 Examples of different types of wave energy converters

Device
Oscillating water
columns
Hinged (and similar)
devices
Overtopping devices
Example
Location of
installation
Location of
generator
Proof of
concept
Electricity
to grid
LIMPET
Shoreline
Onshore
Energetech OWC
Seabed, shallow water
Offshore
OPT PowerBuoy
Offshore
Oyster
Onshore
CETO
Onshore
Wave Dragon
Surface, tethered to
seabed
Offshore
Seawave slot cone
Shoreline or offshore
Onshore or
offshore
Pelamis
Surface, tethered to
seabed
Offshore
Archimedes swing
Immediate
Offshore
Other
that pump high pressure fluid through hydraulic

motors and electrical generators. The Archimedes
Waveswing consists of a sub-surface vertical
cylinder tethered to the seabed (figure 11.16).
An air filled upper cylinder moves against a lower
fixed cylinder with the passage of each wave. The
vertical oscillatory motion is converted to electricity
with a linear generator.
Ocean thermal energy conversion (OTEC) technologies

There are three types of electricity conversion
systems for ocean thermal energy: closed cycle
systems, open cycle systems and hybrid systems.
a
Closed-cycle systems use the oceans warm

surface water to vaporise a working fluid with a
low boiling point, such as ammonia. This vapour
expands and turns a turbine which activates a
generator to produce electricity.
Open-cycle systems boil the seawater by
operating at low pressures, producing steam
that passes through a turbine to generate
electricity.
Hybrid systems combine both closed-cycle and
open-cycle systems.
b
Tide going in
Ocean
Estuary
Turbine and
generator
Tide going out
Estuary
Ocean
AERA 11.15b
305
Figure 11.15 Examples of different types of tidal energy converters. (a) La Rance River estuary tidal barrage
(b) Schematic showing the water levels either side of a barrage during power generation (c) Sea Generation Ltds
SeaGen turbine with blades elevated for servicing (d) BioPower Systems bioStream turbine (e) and (f) Atlantis
Resources Corporations Nereus and Solon turbines, respectively
Source: Wikimedia Commons; www.seageneration.co.uk; www.biopowersystems.com; Atlantis Resources Corporation
POWER TO
THE USER
OFF-THE-SHELF
TECHNOLOGY
ZERO EMISSION
DESALINATED WATER
CETO
TECHNOLOGY
ZERO EMISSION
ELECTRICITY
INTO GRID
LOW PRESSURE
SEAWATER RETURN
PELTON TURBINE
WITH ELECTRICAL
GENERATOR
HIGH PRESSURE
SEAWATER
20-50 METRES
WATER DEPTH
COPYRIGHT / NOT TO SCALE
f
Overtopping
306
Reservoir
Reservoir
Turbine outlet
AERA 11.16f
g
h
Figure 11.16 Examples of different types of wave energy converters. (a) Schematic of Oceanlinx MK3PC (oscillating
water column) planned for installation at Port Kembla (b) Ocean Power Technologies PowerBuoy, Atlantic City,
New Jersey (c) CETO wave energy converter (d) Schematic of CETO wave farm (e) Wave Dragon overtopping device
(f) Schematic showing the operation of Wave Dragon (g) Pelamis wave energy converter (h) Schematic of Archimedes
wave swing
Source: www.oceanlinx.com; www.oceanpowertechnologies.com; www.carnegiecorp.com.au; www.wavedragon.co.uk; www.pelamiswave.com;
Oregon State University
OTEC plants may be land-based, floating and grazing

(WEC 2007):
Land-based plants have the advantage of no
transmission cable to shore and no mooring
costs, but require a cold water pipe to cross the
surf zone and follow the seabed to the required
depth. This results in lower efficiency because a
longer pipe has greater friction losses and there
is greater warming of the cold water before it
reaches the heat exchanger.
Floating plants require a transmission cable to

shore and moorings in deep water, but have the
advantage that the cold water pipe is shorter.
Technology developments in high voltage DC
transmission and mooring in the offshore oil and
gas industry may be utilised in floating plants.
Grazing plants are able to drift in ocean areas that
are prospective for ocean thermal energy where
the output, liquid hydrogen, would be offloaded into
shuttle tankers for transport to market.
Box 11.3 Proposed ocean energy development projects in Australia

Australia currently has no commercial scale
ocean energy projects at an advanced stage of
development.
There are four commercial scale projects that are
at a less advanced stage of development, three
of which are based on utilising tidal energy (table
11.11). These projects are significantly larger than
those previously commissioned in Australia, with a
combined capacity of 805 MW. Two projects account
for around 93 per cent of this additional capacity
the Clarence Strait Tidal Energy project (450 MW)
in the Northern Territory and the Banks Straight
Tidal Energy project (302 MW) in Tasmania. Both
projects have been proposed by Tenax Energy and
are expected to enter production in 2011 and 2013
respectively.
There are at present no barrage-type tidal power
stations in Australia. Several proposals have
been put forward for a station at Derby, Western
Australia, including a 2001 proposal for a 5 MW
plant to deliver 68.4 TJ per year (Hydro Tasmania
2001). It has been set aside because of the
environmental impacts of a construction of
this scale on sensitive wetlands and high grid
connection costs.
Atlantis Resources Corporation currently operates
a 150 kW (soon to be upgraded to 400 kW) Nereus
turbine at a test site at San Remo, Victoria, that is
connected to the electricity grid. The company is
installing a 1.2 MW tidal plant near Cockatoo and
Koolan Islands in King Sound, north of Derby in
Western Australia that is expected to be operational
in early 2010. The project involves the installation
of a 16.5 metre Nereus turbine that will provide up
to 20 per cent of the power needs of Mt Gibson Iron
(www.atlantisresourcescorporation.com).
BioPower Systems has a proposal for a small pilot
plant (250 kW) at Flinders Island, Tasmania,
to commence this year. The project involves the

installation of a 20 metre bioSTREAM turbine.
There are several commercial scale wave energy
demonstration projects either proposed or under
way, in Western Australia, South Australia, Victoria
and Tasmania. Carnegie Wave Energy Limited
announced that it had completed a feasibility
assessment that identified Garden Island as the
preferred site for the development of a 5 MW
demonstration wave energy project based on CETO
3 wave converter. The company has five other
project sites in Australia at the licensing agreement
stage spread across Western Australia, South
Australia and Victoria (Albany, Port MacDonnell,
Portland, Warnambool and Phillip Island) and is
undertaking a feasibility study to assess the viability
of using wave energy to supply power to the remote
naval base at Exmouth in WA (www.carnegiecorp.
com.au).
Victorian Wave Partners, a partnership between
Ocean Power Technologies Australasia (OPTA)
and Leighton Contractors Pty Ltd, have been
awarded a grant under the Australian Governments
Renewable Energy Demonstration Program (REDP)
to develop a 19 MW wave power demonstration
project near Portland in Victoria, Australia. The
project will use Ocean Power Technologies Incs
PowerBuoy wave energy converter (box 11.2;
www.oceanpowertechnologies.com).
BioPower Systems has a 250 kW pilot project planned
for King Island, Tasmania, in collaboration with Hydro
Tasmania using its BioWAVE seabed-mounted hinged
wave energy converter The pilot is scheduled to be
operational in 2010, with the intention of connecting it
to the islands electricity grid.
Oceanlinx is planning demonstration project trials
of its wave energy converter technology in Portland,
Victoria. The project will involve the installation
307
of multiple units integrated into a single wave farm

(www.oceanlinx.com). The Victorian Government is an
investment partner in this project, through its Centre
for Energy and Greenhouse Technologies. Subject
to the successful completion of the demonstration

phase, the company is considering installation of a
wave energy conversion array with a total capacity
of 30 MW.
Table 11.11 Commercial scale tidal energy projects at a less advanced stage of development in Australia
Project
Company
Location
Status
Start up
Capacity
Capital
Expenditure
Victorian
Wave Power
Demonstration
Project
Victorian Wave
Partners Pty Ltd
Portland, Vic
Govt grant
awarded
na
19 MW
na
Clarence Strait
Tidal Energy
Project
Tenax Energy Pty

Ltd
Clarence Strait,
NT
Govt approval
under way
2011
450 MW
na
Port Phillip Heads

Tidal Energy
Project
Tenax Energy Pty

Ltd
Port Phillip
Heads, Vic
Govt approval
under way
2012
34 MW
na
Banks Strait Tidal

Energy Facility
Tenax Energy Pty

Ltd
Banks Strait, TAS
Govt approval
under way
2013
302 MW
na
Source: ABARE 2009
11.5 References
IEA, 2009b, World Energy Outlook 2009, Paris

Economics), 2009, Electricity Generation Major Development
Projects October 2009 Listing, Canberra, November 2009
IEA, 2009c, Ocean Energy: Global technology development

status, Paris
Australian Hydrographic Service, 2006, Australian National

Tide Tables, Royal Australian Navy, Canberra
308
Carnegie Corporation, 2008, Carnegie 2007 Annual Report,

Carnegie Corporation Ltd
Hasselmann K and the WAMDI Group, 1988, The WAM
Model A third generation ocean wave prediction model.
Journal of Physical Oceanography, 18, 17751810
Hydro Tasmania, 2001, Study of Tidal Energy Technologies
for Derby. Hydro Electric Corporation, Report No. WA107384-CR-01
Hughes MG and Heap AD, 2010, National-scale wave energy
resource assessment for Australia. Renewable Energy (in
press)
Balances (2009 edition), Paris
IEA, 2008, Energy Technology Perspectives 2008

Scenarios & Strategies to 2050, Paris
Porter-Smith R, Harris PT, Andersen OB, Coleman R,
Greenslade D and Jenkins CJ, 2004, Classification of the
Australian continental shelf based on predicted sediment
threshold exceedence from tidal currents and swell waves.
Marine Geology, 211, 120
Pugh D, 2004, Changing Sea Levels: Effects of Tides,
Weather and Climate, Cambridge University Press
Resources, Interim Update 2009, <http://www.worldenergy.
org/publications/survey_of_energy_resources_interim_
update_2009/default.asp>
Chapter 12
Bioenergy
12.1 Summary
Key messages

Bioenergy is a form of renewable energy derived from biomass (organic materials) to generate
electricity and heat and to produce liquid fuels for transport.
The potential bioenergy resources in Australia are large and diverse. Unused biomass residues
and wastes are a significant under-exploited resource.
Bioenergy offers the potential for considerable environmental benefits. At the same time, good
management of the resource is needed to ensure that problems associated with use of land and
water resources are avoided.
Commercialisation of second generation technologies will result in a greater availability of nonedible biomass, reducing the risk of adverse environmental and social impacts.
Australias bioenergy use is projected to increase by 60 per cent from 200708 to 202930.
12.1.1 World bioenergy resources

and market
Current global bioenergy resources used for
generating electricity and heat are dominated by
forestry and agriculture residues and organic waste
streams. A small proportion of sugar, grain and
vegetable oil crops are used for biofuel production.
Bioenergy represents around 10 per cent of the
worlds primary energy consumption. Around 81
per cent of world bioenergy consumption occurs
in non-OECD countries, where it is mostly used
for direct burning.
In 2007, the global share of bioenergy in total
electricity generation was only 1.3 per cent.
However, world electricity generation from
bioenergy resources is projected by the IEA in its
reference case to increase by 5 per cent per year
to 2030 and its share of bioenergy generation is
projected to reach 2.4 per cent in 2030.
Biofuels currently represent 1.3 per cent of global
use of transport fuels. By 2030, the share of
biofuels in total transport fuels is projected by the
IEA to increase to 4.0 per cent.
12.1.2 Australias bioenergy resources

Currently Australias bioenergy use for generating
heat and electricity is sourced mainly from
bagasse (sugar cane residue), wood waste, and
capture of gas from landfill and sewage facilities
(figure 12.1).
Biofuels for transport represent a small

proportion of Australias bioenergy. Ethanol is
produced from sugar by-products, waste starch
and grain. Biodiesel is produced from used
cooking oils, tallow from abattoirs and oilseeds.
There is potential to expand Australias bioenergy
sector with increased utilisation of wood residues
from plantations and forests, waste streams and
non-edible biomass.

bioenergy resources
The proportion of biomass potentially available
for bioenergy is dependent on a wide range
of factors such as feedstock prices, seasonal
availability and the relative value of biomass for
the production of other commodities.
A key consideration in the expansion of the
bioenergy industry is to ensure sustainable use
of resources to avoid any potential negative
environmental and social impacts.
The commercialisation of second generation
technologies will open up a range of new
feedstocks from non-edible biomass (e.g. woody
parts of plants) for biofuels and electricity
generation. These second generation feedstocks
can be produced on less fertile agricultural
lands and can potentially provide environmental
benefits. Some second generation feedstocks,
such as algae, can be grown with saline or waste
water rather than utilising freshwater resources.
309
310
Figure 12.1 Land use and bioenergy facilities in Australia

Note: Areas depticted as under irrigation are exaggerated for presentation
12.1.4 Australias bioenergy market

Bioenergy accounted for only 4 per cent of
Australias primary energy consumption in
200708, but it represented 78 per cent of
Australias renewable energy use.
The majority of Australias bioenergy use is
sourced from bagasse and wood waste, which
represents 92 per cent of bioenergy use for direct
heat and electricity generation. Biogas represents
6 percent of bioenergy use and the remaining 2
percent is biofuels for transport fuel.
ABAREs latest Australian energy projects include
the Renewable Energy Target, a 5 per cent
policies. Bioenergy use in Australia is projected
to increase by 2.2 per cent per year to 340
petajoules (PJ) in 202930 (figure 12.2).
Electricity generation from bioenergy is projected
to increase from 2 terawatt hours (TWh) in 2007
08 to 3 TWh by 202930 growing at an average
rate of 2.3 per cent per year (figure 12.3).

and world market
12.2.1 Definitions
Bioenergy denotes the use of organic material
(biomass) as a source of energy for power generation
and direct source heat applications in all energy
sectors including domestic, commercial and industrial
purposes as well as the production of liquid fuels
for transport.
Bioenergy is a form of renewable energy. Biomass
releases carbon dioxide (CO2) and small amounts of
other greenhouse gases when it is converted into
another form of energy. However CO2 is absorbed
during the regrowth of the restored vegetation
through photosynthesis process.
Biomass is vegetable and animal derived organic
materials, which are grown, collected or harvested
for energy. Examples include wood waste, bagasse
and animal fats.
A conventional combustion process converts solid
biomass through direct burning to release energy
in the form of heat which can be used to generate
C H A P T E R 1 2: B IOENER GY
350
5.0
300
4.4
1.0
3.8
2
1.9
100
TWh
PJ
2.5
150
3.1
200
0.5
250
1.3
50
0.6
1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 202900
01
02
03
04
05
06
07
08
30
1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 202900
01
02
03
04
05
06
07
08
30
Year
Year
Bioenergy
consumption (PJ)
Share of
total (%)
AERA 12.2
Bioenergy electricity
generation (TWh)
Share of
total (%)
AERA 12.3
Figure 12.2 Projected primary consumption of bioenergy

in Australia

bioenergy in Australia
Source: ABARE 2009a; ABARE 2010
Source: ABARE; ABARE 2010
electricity and heat. Chemical conversion processes

breaks down the biomass into fuels, in the form of
biogas or liquid biofuels, which are then used for
electricity generation and transport.
generate electricity and heat include agricultural and

forest residues, and municipal wastes and residues.
Biofuels are produced from waste products, grain
(sorghum) and oil-bearing crops. Australian bioenergy
production is mainly consumed domestically.
Biogas is composed principally of methane and

CO2 produced by anaerobic digestion of biomass.
It is currently captured from landfill sites, sewage
treatment plants, livestock feedlots and agricultural
wastes.
Biofuels are liquid fuels, produced by chemical
conversion processes that result in the production
of ethanol and biodiesel. Biofuels can be broadly
grouped according to the conversion processes:
First generation biofuels are based on
fermentation and distillation of ethanol from sugar
and starch crops or trans-esterification of oilseed
crops and animal fats to produce biodiesel.
First generation technologies are proven and are
currently used at a commercial scale.
Second generation biofuels use biochemical
or thermochemical processes to convert of
lignocellulosic material (non-edible fibrous or
woody portions of plants) and algae to biofuels.
Second generation technologies and biomass
feedstocks are in research and development and
demonstration (RD&D) stage.
Third generation biofuels are in research
and development (R&D) and comprise
integrated biorefineries for producing biofuels,
electricity generation and bioproducts (such as
petrochemical replacements).
12.2.2 Bioenergy supply chain

Figure 12.4 provides a conceptual representation of
Australias current bioenergy industry. Currently, there
are a wide range of bioenergy resources potentially
available for bioenergy utilisation. Biomass used to
There is a range of technologies currently available

for converting biomass into energy for electricity
and heat generation and/or transport biofuels.
The technologies are based on either thermal or
chemical conversion processes or a combination.
The fuel type (in particular the heating value and
moisture) and the conversion technology have an
effect on the efficiency. The energy conversion
efficiency for wood waste in a direct combustion
facility is about 35 per cent, compared to combined
heat and power facility efficiency of between 70 and
85 per cent.
Electricity and heat generation

In Australia, biomass electricity generation is
predominantly from bagasse (sugar cane residues)
by steam turbine, with some cogeneration
installation. Several wood waste bioenergy facilities
use steam turbines and fluidised bed combustion
technologies. There is minor electricity generation from
co-firing with coal, and facilities using urban waste.
Biogas from landfill and sewage facilities are located
in urban centres and generate electricity
by means of reciprocating engine or gas turbine.
Some facilities have cogeneration installations.
Transport biofuels
A small amount of biofuels is used in the transport
sector. In Australia, first generation biofuels consist
of ethanol produced from C-molasses and wheat
starch by-products and grain (mainly sorghum), and
biodiesel predominantly produced from tallow (animal
fats) and used cooking oil.
311
Development and
Production
Resources
Storage
End Use Market
Development
decision
Biogas
projects
Industry
Electricity
and Heat
Generation
Commercial
Direct
Burning
Resource
potential
Biomass
projects
Residential
Processing
Biofuels
projects
Processing
(biofuels)
Export
Storage
Transport
AERA 12.4
Figure 12.4 Australias bioenergy supply chain

Table 12.1 Key bioenergy statistics

unit
Australia
200708
OECD
2008
World
2007
PJ
226
9317
48 980
Share of total
3.9
4.1
9.7
0.3
3.0
1.9
Electricity output
TWh
2.2
214
255
Share of total
0.9
2.0
1.3
8.7
4.8
6.0
GW
0.87
1.6
na
Transport
PJ
4.9
987
1207
Share of total
0.4
1.9
1.3
29.9
22.9
312
Source: IEA 2009a; ABARE 2009a
12.2.3 World bioenergy market
Resources
Around 10 per cent of the worlds primary energy

consumption comes from bioenergy (table 12.1).
The share of bioenergy in primary energy
consumption is higher in non-OECD countries than
in OECD countries. In Australia, the bioenergy
share is comparable to the OECD average, at
around 4 per cent. The majority of the worlds
bioenergy is used directly for heat production
through the burning of solid biomass; only 4 per
cent is used for electricity generation and another
2.5 per cent is in the form of biofuels used in the
transport sector.
Global bioenergy resources are difficult to quantify

due to the resources being committed to food, animal
feed and material for construction. The availability of
biomass for energy is also influenced by population
growth, diet, agricultural intensity, environmental
impacts, climate change, water and land availability
(IEA Bioenergy 2008).
Current bioenergy resources consist of residues

from forestry and agriculture, various organic waste
streams and dedicated biomass production from
pasture land, wood plantations and sugar cane.
Unused residues and waste are a significant underexploited resource.

At present, the main biomass feedstocks for
electricity and heat generation are forestry and
agricultural residues and municipal waste in
cogeneration and co-firing power plants. In 2007,
fuel wood dominates (67 per cent) the share of
biomass sources in the bioenergy mix (figure 12.5).
Fuel wood is used in residential applications in
inefficient stoves for domestic heating and cooking,
which is also considered a major health issue in
developing countries (IEA Bioenergy 2009a). This
traditional use is expected to grow with increasing
population, however there is scope to improve
efficiency and environmental performance.
The main growth markets for power generation from
bioenergy are the European Union, North America,
Central and Eastern Europe and Southeast Asia
(IEA Bioenergy 2007). China continues to increase
power generation from industry-scale biogas (mainly
livestock farms) and straw from agricultural residues.
The sugar industry in many developing countries
continues to bring online bagasse-fuelled power
plants (REN21 2009).
A small share of sugar, grain and vegetable oil crops is
used for the production of biofuels. There is increasing
interest in transport biofuels in Europe, Brazil, North
America, Japan, China and India (IEA Bioenergy 2007).
There is potential to expand the use of conventional
crops for energy; however careful consideration of land
availability and food demand is required.
There is a mature commercial market for first
generation biofuels. Biofuels from commercially
available technology are more prospective in
regions where energy crop production is feasible:
for example, sugar cane in subtropical areas of
South America and sub-Saharan Africa, and sugar
beet in more temperate regions such as the United
States, Argentina and Europe. In the longer term,
lignocellulosic crops could provide bioenergy
resources for second generation biofuels which
are considered more sustainable, provide land use
opportunities and will reduce the competition with
food crops.

World primary consumption of bioenergy was
48980PJ in 2007 (table 12.1). From 2000 to 2007
world bioenergy use increased at an average rate
of 1.9 per cent per year. OECD countries accounted
for 19 per cent (9317 PJ) of world bioenergy
consumption; however the average rate of growth in
consumption was 3 per cent per year from 2000 to
2008, faster than the world average.
In 2007, China was the largest user of bioenergy,
consuming 8145 PJ, followed by India (6771 PJ)
and Nigeria (3582 PJ) (figure 12.6). The majority of
Forest residues
1%
Charcoal
7%
Black liquor 1%
Wood industry
residues 5%
Recovered
wood 6%
Animal
by-products
3%
Fuel wood
67%
Agriculture
10%
Agricultural
by-products
4%
Energy
crops
3%
Municipal solid
waste and
landfill gas
3%
AERA 12.5
Figure 12.5 Share of biomass sources in the primary

bioenergy mix in 2007
Source: IEA Bioenergy 2009a
a) Bioenergy use
China
India
313
Nigeria
United States
Brazil
Indonesia
Pakistan
Vietnam
Germany
Ethiopia
Australia
0
2000
4000
6000
8000
9000
PJ
b) Share in total primary energy consumption

China
India
Nigeria
United States
Brazil
Indonesia
Pakistan
Vietnam
Germany
Ethiopia
Australia
AERA 12.6
20
40
60
80
100
Figure 12.6 Primary consumption of bioenergy,

by country, 2007
Source: IEA 2009a
a) Electricity generation from bioenergy
a) Biofuels use
United States
United States
Germany
Germany
Japan
Brazil
Brazil
France
United Kingdom
China
Sweden
Canada
Finland
Spain
Canada
Netherlands
Italy
United Kingdom
France
Sweden
Australia
Australia
0
10
20
30
40
50
60
70
80
100
200
300
TWh
500
600
700
b) Share in total transport fuels use
b) Share in total electricity generation

United States
United States
Germany
Germany
Japan
Brazil
Brazil
France
United Kingdom
China
Sweden
Canada
Finland
Spain
Canada
Netherlands
Italy
United Kingdom
France
Sweden
Australia
AERA 12.7
10
12
Australia
14
AERA 12.8
%
314
400
PJ
Figure 12.7 Electricity generation from bioenergy,

by country, 2007
Figure 12.8 Biofuels use for transport, by country, 2007
Source: IEA 2009a
Source: IEA 2009a
bioenergy use in China, India and Nigeria is solid

biomass used in the residential sector. Bioenergy
represented a relatively small proportion of
Chinas total primary energy consumption, with
a share of 10 per cent, while Nigerias bioenergy
use represented 80 per cent of its total primary
energy consumption and Ethiopias bioenergy use
represented 90 per cent of its energy consumption
(figure 12.6).
While bioenergy use is higher in non-OECD countries,

it is of considerably more significance for electricity
generation in OECD countries. Bioenergy for electricity
generation represents 17 per cent of total bioenergy
consumption in OECD countries, compared to only
1 per cent in non-OECD countries (IEA 2009a).
A small proportion of the worlds electricity
generation is sourced from bioenergy. In 2007,
the global share of bioenergy in total electricity
generation was only 1.3 per cent (table 12.1).
Despite its small share, electricity generated from
bioenergy increased at an average rate of 6 per cent
per year from 2000 to 2007, to reach 255 TWh.
In some countries, the share of bioenergy in total
electricity generation is significantly higher than the
world average. Finland had a bioenergy share of
electricity generation of more than 12 per cent in
2007 (figure 12.7). The United States is the largest
contributor to total world electricity generation from
bioenergy, followed by Germany and Japan.
Worldwide primary solid biomass is the major

bioenergy fuel used for electricity generation. In 2007,
electricity generated from solid biomass represented
62 per cent of bioenergy electricity, while biogas
represented 11 per cent and waste represented the
remaining 27 per cent of electricity from bioenergy.
Transport biofuels
The United States is the worlds largest consumer
of biofuels, using 619 PJ in 2007 (figure 12.8).
However, biofuels represent only 2.3 per cent of total
transport fuels use in the United States. Germany
and Brazil follow the United States as large biofuels
users. Biofuels represent a larger share of total
transport fuels use in Germany and Brazil, 7.2 per
cent and 6.0 per cent, respectively.
Trade
The increase in demand for biomass feedstock (e.g.
wood chips, vegetable oils and agricultural residues)
and bioenergy commodities (e.g. ethanol, biodiesel

and wood pellets) has seen the rapid growth in
international trade (IEA Bioenergy 2009b). The main
biomass feedstocks and bioenergy commodities
traded and the trade routes include:
oilseed crops, as well as utilising the large volumes

of unused residues and wastes. Lignocellulosic crops
are expected to contribute in the medium- to longterm. Algae could make a significant contribution in
the longer term (IEA Bioenergy 2009b).
ethanol from Brazil to Japan, United States and

western Europe;
wood pellets from Canada, United States and

eastern Europe to western Europe; and
palm oil and agricultural residues from Brazil and
Southeast Asia to western Europe.
In addition, there is a substantial amount of trade
within Europe.
World market outlook for bioenergy to 2030

Bioenergy use is projected by the IEA to increase
moderately to 2030, with transport biofuels growing
at a slightly faster rate than electricity generation
from bioenergy. Among non-transport uses, an
increasing proportion of bioenergy is projected to be
devoted to electricity generation rather than direct
burning of biomass, in line with growing electricity
demand, particularly in non-OECD countries.
Global demand for bioenergy resources is expected
to increase with the projected growth in bioenergy
use. In the short-term, demand for bioenergy
resources are likely to be met by sugar, starch and
The IEA projects world electricity generation from

bioenergy to increase to 839 TWh by 2030, growing
at an average rate of 5.3 per cent per year (table
12.2). The share of bioenergy in electricity generation
is not projected to increase significantly, reaching
only 2.4 per cent in 2030, from 1.3 per cent
currently. Electricity generation from bioenergy is
projected to increase at a faster rate in non-OECD
countries than in OECD countries, although from a
smaller base.
The biggest increases in electricity generation from
bioenergy are projected to occur in the United States,
Europe and China. The costs of power generation
from renewables, including bioenergy, are expected
to fall over time as a result of increased deployment.
Transport biofuels
Worldwide use of biofuels is projected to increase at
an average rate of 6.9 per cent per year to 5568 PJ
by 2030 (table 12.3). In non-OECD countries, biofuels
use is projected to increase at an average rate of 11.2
per cent per year, whereas it is projected to increase
315
Table 12.2 IEA reference case projections for world bioenergy electricity generation
OECD
Share of total
Non-OECD
Share of total
unit
2007
2030
TWh
217
492
2.0
3.7
3.6
TWh
41
347
0.5
1.6
9.7
TWh
259
839
Share of total
1.3
2.4
5.2
World
Source: IEA 2009b
Table 12.3 IEA reference case projections for transport biofuels consumption
unit
2007
2030
OECD
PJ
963
3056
Share of total
1.9
5.8
5.1
Non-OECD
PJ
461
2512
Share of total
1.0
2.9
7.6
World
PJ
1424
5568
Share of total
1.5
4.0
6.1
Source: IEA 2009b
12.3 Australias bioenergy

at a rate of 5 per cent per year in OECD countries.

However, the share of biofuels in total transport fuel
use is projected to remain at less than 3 per cent
in non-OECD countries, while in OECD countries it is
projected to increase to almost 6 per cent.
12.3.1 Bioenergy resources

Bioenergy resources currently used, potential future
resources and the bioenergy outputs are summarised
in table 12.4. There are a range of bioenergy
resources (feedstocks) available for multiple
conversion technologies to generate electricity and
heat and produce biofuels. Bioenergy resources
are difficult to estimate due to their multiple and
competing uses. There are production statistics
for current commodities such as grain, sugar, pulp
wood and saw logs; however these commodities are
currently largely committed to food, animal feed and
materials markets. They could be switched to the
bioenergy market in certain conditions, but this may
not be the highest order use for them.
Biofuels use is not expected to increase significantly

in the short term. The fall in oil prices at the end of
2008 affected the profitability of biofuels production
and led to the cancelling of many planned biofuels
projects around the world. Further affecting the
profitability of biofuels production, many countries
have scaled back their biofuels policies as a result
of concerns over the impact of biofuels on food
prices, land and water resources and biodiversity.
Biofuels production and use is projected to recover in
the longer term, however, aided by second generation
production technologies. Second generation biofuels
are projected to represent almost 25 per cent of the
increase in total biofuels production over the period
to 2030 (IEA 2009b).
Australias potential bioenergy resources are large.

There are under-utilised resources in crop residues,
Table 12.4 Current and future bioenergy resources

Biomass groups
Current resources
Agricultural related
wastes and byproducts
Livestock wastes:
manure
abattoir wastes solids
By-products:
wheat starch
used cooking oil
Sugar cane
Bagasse, fibrous residues of

sugar cane milling process
Sugar and C-molasses
Energy crops
High yield, short rotation crops

grown specifically:
sugar and starch crops
oil bearing crops sunflower,
canola, juncea and soya beans
Forest residues
Wood from plantation forests
Wood related
waste
Saw mill residues:

wood chips and saw dust
Pulp mill residues:
black liquor and wet wastes
316
Urban solid waste
Bioenergy
Bioenergy
P
Crop and food residues from

harvesting and processing:
large scale: rice husks, cotton
ginning, and cereal straw
small scale: maize cobs,
coconut husks and nut shells
Trash, leaves and tops from

harvesting
Woody crops (oil mallee)

GM crops
Tree crops
Woody weeds
(e.g. Camphor Laurel)
New oilseed (Pongamia) and
sugar (agave) crops
Algae (micro and macro)
Wood from plantation forests and

native forestry operations
Food related wastes, garden

organics, paper and cardboard
material and urban timber
Landfill gas
Methane emitted from landfills

mainly municipal solid wastes
and industrial wastes
Sewage gas
Methane emitted from the solid

organic components of sewage
Note: P = electricity and heat generation; T = transport biofuel production

Source: Batten and OConnell 2007; Clean Energy Council 2008
Future resources
plantation and forest residues and waste streams.

There is a significant expansion into a new range of
non-edible biomass feedstocks with the development
of second generation technologies. Potential
feedstocks of the future include modifying existing
crops, growing of new tree crops and algae.
There are many factors to be taken into account
for each bioenergy resource, such as moisture
content, resource location and distribution, and
type of conversion process. Different sources of
biomass have very different production systems and
therefore can involve a variety of sustainability issues
ranging from very positive benefits (e.g. use of waste
material, or growing woody biomass on degraded
agricultural land) through to large scale diversion
of high input agricultural food crops for biofuels
(OConnell et al. 2009a). There are also a range of
potential impacts on the resources including drought,
flood, fire, climate change and energy prices. Future
biomass feedstocks from agricultural production are
dependent on whether production areas expand or
reduce or yields increase.
The proportion of biomass potentially available

will depend on the value of biomass relative to
competing uses, impact of their removal (retention
of biomass in situ returns nutrients to soil, improves
soil structure and moisture retention), and global
oil prices. The right economic conditions may result
in some of the biomass potentially being used
for bioenergy production. Depending on the price
point, biomass may be diverted to biofuels or
electricity generation sawmill residues otherwise
sold for garden products, for example, or pulpwood
chipped and exported or used for paper production
may be diverted to bioenergy if it is a higher value
product.

Current bioenergy resources used for generating
electricity and heat are predominantly from agricultural
wastes and by-products, wood waste, landfill and
sewage facilities (figure 12.9). The Clean Energy
Council (2008) identified significant potential for
growth in bioenergy production from waste streams,
such as landfill and sewage gas and urban waste.
317
Figure 12.9 Distribution of bioenergy electricity and heat generation facilities

Note: Areas depicted as under irrigation are exaggerated for presentation
Agricultural related wastes in total are a very

large resource. However, the resources are widely
dispersed and can have a range of alternative uses
including composting for garden product manufacture
and stockfeed for animals. Currently, the bulk of
biomass resources are not collected as a feedstock
for bioenergy.
The sugar cane industry is one of few industries
self sufficient in energy, through the combustion of
bagasse in cogeneration plants. The sugar mill
directly consumes the heat and electricity generated
and any surplus steam is used to generate electricity
and fed into the power grid. The industry is located
mainly in coastal Queensland, with a few mills in
northern New South Wales. The total annual sugar
cane crop is about 35.5 million tonnes (Mt), of which
14 per cent is cane fibre, resulting in a total available
energy of above 90 PJ (Clean Energy Council 2008).
Currently, the energy generation is dependent on
the crushing periods and the availability of bagasse
resources. There is potential to increase electricity
generation efficiency with integrated gasification
combined cycle technology and expand the biomass
318
Figure 12.10 Distribution of biofuel plants

Note: Areas depicted as under irrigation are exaggerated for presentation
feedstock to include sugar cane trash, tops and

leaves.
Other agricultural waste streams, including manure
from livestock raised or yarded in concentrated
areas, are suitable for generating bioenergy. Waste
material can be used to produce stationary energy
and assist in reducing environmental problems from
waste disposal, methane emissions and pollution of
water supplies.
Wood waste and forest residues are only used in
a few bioenergy plants in Australia for generating
electricity. For the purposes of resource assessment,
it is assumed that native forest wood waste will
remain constant; the potential from plantations
may increase in line with plantation expansion.
Wood related waste for energy generation, while
having economic benefits, also has to be managed
in terms of environmental considerations. In
Australia, governments at all levels, have established
regulatory mechanisms, including Regional Forest
Agreements, as well as other specific provisions
under the Renewable Energy Target concerning the
eligibility for forest wood waste for bioenergy use
in order to manage the sustainable use of these

products. These regulatory frameworks place some
limitations on the use of wood waste in Australia for
The use of landfill gas (mainly methane) to generate
electricity is a relatively mature technology, which
involves installing a network of perforated pipes into
an existing landfill and capturing the gas generated
from waste decomposition. The captured gas is
used to generate electricity using reciprocating gas
engines. Most facilities are centred near the major
urban centres and used locally.
Bioreactor landfill technology accelerates the rate
of waste decomposition maximising gas production
by recirculating water through a specially designed
landfill. This technology is being used at the
Woodlawn Bioreactor, New South Wales, a disused
open cut mine. The site accepts 300000 tonnes
of sorted residual waste per year and will ultimately
support up to 25 Megawatts (MW) of generation
capacity.
Sewage gas can be collected at treatment plants to
generate electricity and heat. Organic waste is fed
into an anaerobic digester to produce a methane-rich
biogas then combusted in customised gas engines or
gas turbines. Thermal energy produced by the engine
during combustion is recovered and used to heat the
anaerobic digestion process.
Transport biofuels
As at late 2009, there are three major ethanol plants
and three major biodiesel plants in operation, with
a total production capacity of about 330 million
litres (ML) and 175 ML, respectively (figure 12.10).
Ethanol production is from C-molasses from sugar
processing, grain (mainly sorghum) and starch from
flour milling. Biodiesel production is from tallow and
used cooking oil. Biodiesel production is constrained
by a limited availability of low cost feedstocks, which
are by-products or waste streams.
12.3.2 Bioenergy market

Bioenergy accounted for 78 per cent of Australias
renewable energy use but only 4 per cent of
Australias primary energy consumption in 200708.
Over the decade from 19992000 to 200708,
bioenergy use increased at an average rate of only
0.3 per cent per year. In Australia, production and
consumption of bioenergy are about equal, because
there is currently only very small trade of bioenergy.
In mid 2009 Australias largest exporter of wood
pellets secured two three-year contracts, totalling
$130 million to supply Europe. The wood pellets will
be used in co-firing plants and home heating markets.
The majority of Australias bioenergy is from wood
and wood waste and bagasse. Australias use of
wood and wood waste, predominately for direct heat
240
220
200
180
160
PJ
140
120
100
80
60
40
20
0
1960-61
1966-67
1972-73
1978-79
1984-85
1990-91
1996-97
2002-03
2007-08
Year
Biofuels
Bagasse
Landfill gas
Wood, woodwaste
AERA 12.11
Figure 12.11 Australias primary consumption of bioenergy

Source: ABARE 2009a
319
Food,
beverages,
textiles
57.6%
Other industry
1.1%
Non-ferrous
metals
1.2%
Wood, paper
and printing
9.3%
320
2.0
0.8
1.5
0.6
1.0
0.4
0.5
0.2
Residential
29.1%
1.0
TWh
Commercial
and services
0.4%
Road
transport
1.4%
2.5
0
1989-90
1992-93
1995-96 1998-99 2001-02 2004-05 2007-08
Year
Electricity
generation (TWh)
AERA 12.12

generation (%)
AERA 12.13
Figure 12.12 Australian bioenergy use, by industry,

200708
Figure 12.13 Australian electricity generation from

bioenergy
Source: ABARE 2009a
Source: ABARE
application, has declined over time. In the 1960s

wood use represented between 70 and 85 per cent
of total bioenergy use, but as bagasse use expanded,
this share declined to 5565 per cent in the 1970s
and remained relatively constant in the 1980s and
1990s.
predominantly for heating. There are also small

amounts of bioenergy used in the transport and
commercial and services sectors.
In 200708, bagasse and wood represented 50 per

cent and 42 per cent of bioenergy use, respectively.
Landfill and sewage gas represented 6 per cent of
total bioenergy use and liquid biofuels comprised the
remaining 2 per cent (figure 12.11).
Bioenergy use, by industry

Around 58 per cent of Australias bioenergy is used
in the food and beverages sector, specifically within
the sugar industry, which uses bagasse from its
sugar production to generate electricity and heat.
The residential sector is the second largest bioenergy
user, accounting for 29 per cent of bioenergy use
(figure 12.12). This is in the form of wood used
In 200708, wood and wood waste and landfill
and sewage biogas fuel inputs to public electricity
generation (excluding cogeneration) were 19.7 PJ,
which generated 2.2 TWh of electricity. In addition,
112 PJ of bagasse were used as fuel within the food,
beverages and textiles sector, the majority of which is
used in sugar refineries in cogeneration plants.
The contribution of wood, wood waste and biogas to
Australias electricity generation has increased over
the past two decades. From 198990 to 200708
bioenergy electricity generation grew at an average
rate of 6 per cent per year. The share of bioenergy in
total electricity generation increased modestly from
0.5 per cent to 0.8 per cent over that period (figure
12.13).
Table 12.5 Capacity of electricity generation from bioenergy (MW), 2009

Biogas
Bagasse
Wood
waste
Other
bioenergyb
Total
bioenergy
New South Walesa
73
81
Victoria
80
42
199
34
114
Queensland
19
377
15
415
South Australia
Western Australia
22
10
32
27
63
102
Tasmania
Northern Territory
Australia
226
464
73
104
867
Share of total renewable electricity capacity (%)
2.2
4.4
0.7
1.0
8.3
a Includes the ACT. b Unspecified biomass and biodiesel

5.0
In contrast, biogas-fuelled plants at landfill and

sewage facilities are centred near major urban
centres across Australia. There are landfill and
sewage sites across all states and territories,
comprising a total installed capacity of 226 MW.
Wood waste facilities represent 0.7 per cent of
renewable energy capacity and have a total capacity
of 73 MW (table 12.5).
4.5
4.0
3.5
PJ
3.0
2.5
2.0
1.5
1.0
Transport biofuels
0.5
Biofuels comprised about 0.5 per cent of Australias

transport fuel supply in 200708. Australian biofuels
production decreased by about 40 per cent from
200203 to 200405 to 1.3 PJ. However, from
200405 to 200708 biofuels production increased
almost fourfold to 4.9 PJ (figure 12.14).
0
2002-03
2003-04
2004-05
2005-06
2006-07
Year
2007-08
AERA 12.14
Figure 12.14 Australian biofuels production

Source: ABARE 2009a
Table 12.6 Biofuels production in Australia

200506
200607
200708
200809
ML
ML
ML
ML
Biodiesel
21
54
50
85
Ethanol
42
84
149
209
Total
63
138
199
294
Source: Department of Resources, Energy and Tourism
The total capacity of electricity generation from

bioenergy represented 1.6 per cent of all electricity
generation capacity in 2008. Bagasse-fuelled
electricity generation facilities represent 54 per cent of
total bioenergy capacity, at 464 MW. These facilities
are located predominantly in Queensland where sugar
production plants are located (table 12.5).
In 200708, Australias ethanol production is

estimated at 149 ML and biodiesel production at
50ML. Ethanol production has increased as a result
of the new Dalby plant in Queensland and a small
expansion at the Manildra plant in New South Wales.
In 200809 ethanol production increased to 209
ML. Biodiesel production fell slightly from 200607
to 200708, due to three plants temporarily halting
production in 2007 and 2008 (table 12.6). In
200809, biodiesel is estimated to have increased
to about 85 ML.
There are currently three major ethanol plants in
operation. The largest operator is Manildra Group in
New South Wales with total production capacity of
180 ML. Three major biodiesel plants are in production
with a total production capacity of 175ML. The total
operating biofuels production capacity in Australia is
around 600 ML a year (table 12.7).
Table 12.7 Liquid biofuels production facilities in Australia, 2009

Location
Capacity
ML/yr
Feedstocks
Fuel ethanol
Manildra Group, Nowra, NSW
180
CSR Distilleries, Sarina, Qld
60
C-molasses
90
Sorghum
Dalby Biorefinery, Dalby, Qld

Total
Waste wheat starch, some low grade grain
330
Biodiesel
Biodiesel Industries Australia, Maitland, NSW
15
Used cooking oil, vegetable oil
Biodiesel Producers Limited, Wodonga, Vic
60
Tallow, used cooking oil
Smorgon Fuels, Melbourne, Vic

Various small producers
Total
100
5
Dryland juncea (oilseed crop), tallow, used cooking oil,

vegetable oil
Used cooking oil, tallow, industrial waste, oilseeds
180
Biodiesel plants with limited production

Australian Renewable Fuels, Adelaide, SA
45
Tallow
Australian Renewable Fuels, Picton, WA
45
Tallow
Total
90
Biodiesel plants not in production

Eco-Tech Biodiesel, Narangba, Qld
30
Tallow, used cooking oil
Source: Department of Resources, Energy and Tourism
321
Table 12.8 Bioenergy projects recently developed, as at September 2009

Project
Company
State
Type
Start up
Capacity
(MW)

Tumut
Visy Paper
NSW
Wood waste
2001
17.0
Rocky Point
National Power and Babcock and

Brown Joint Venture
QLD
Bagasse
2001
30.0
Stapylton
Green Pacific Energy
QLD
Wood waste
2003
5.0
South Cardup
Landfill Management Services Ltd
WA
Landfill methane
2005
6.0
Werribee (AGL)
AGL
VIC
Sewage methane
2005
7.8
Pioneer 2
CSR Sugar Mills
QLD
Bagasse
2005
63.0
Woodlawn
Woodlawn Bioreactor Energy Pty Ltd
NSW
Landfill methane
2006
25.6
Carrum Downs 1 & 2
Melbourne Water
VIC
Sewage methane
2007
17.0
Eastern Creek 2
LMS Generation Pty Ltd
NSW
Landfill methane
2008
8.8
Condong
Sunshine Electricity
NSW
Bagasse
2008
30.0
Broadwater
Sunshine Electricity
NSW
Bagasse
2008
30.0
Dalby Biorefinery Ltd
QLD
Ethanol
2008
90.0
Transport biofuels
Dalby
Source: Geoscience Australia; ABARE
Recent bioenergy projects
322
Eleven bioenergy electricity projects have been

commissioned in Australia since 2001, with a
combined capacity of 240.2 MW (table 12.8).
Bagasse-fuelled bioenergy plants accounted for
most of the commissioned capacity. Australias
largest recently commissioned bioenergy plant is CSR
Sugar Mills in Queensland with a capacity of 63 MW.
Australias first grain to ethanol plant at Dalby,
Queensland commenced operation in December
2008. The plant processes 220 000 tonnes of dry
grain (sorghum) as its feedstock with a capacity of
90 ML of ethanol per year.

There is significant potential to expand the use of
biomass for electricity, heat and transport biofuels
production. There is a diversity of bioenergy
resources and conversion technologies that can
provide greenhouse gas emissions savings and
reduce waste disposal issues. There may be
opportunities for the bioenergy sector to support
agricultural industries and rural communities through
growing complementary energy crops and
in developing regional energy facilities.

The future growth of Australias bioenergy industry
will depend on its competitiveness against other
energy sources, the commercialisation of efficient
conversion technologies and availability of bioenergy
resources.
The cost competitiveness of bioenergy with
alternative electricity generation and transport fuels
will be dependent on the cost of resources (both

bioenergy and alternatives), conversion technologies
and relevant government policies, particularly those
that impinge on both the availability of resources and
their price.
Cost factors aside, the growth of the bioenergy
industry will be influenced by the commercialisation
of second generation technologies, which will also
increase the range of bioenergy resource options and
reduce competition for resources between bioenergy
feedstocks and agricultural/forestry commodities.
Development of effective harvesting and processing
methods and improved transportation and storage will
also be important factors in achieving efficiencies in
bioenergy production.
Availability of biomass will be central to the expansion
of the bioenergy sector. The availability of biomass is
influenced by:
diversion of current biomass production and
waste and residues streams. Biomass residues
from forestry, agricultural harvest and processing,
and waste streams, such as landfill and sewage
gas, offer a large under-utilised energy resource,
which can also assist in waste disposal issues;
change in harvesting regimes for crops or forests
(e.g. stubble from agricultural lands and thinnings
from forests); and
new production systems which may include land
use change, in turn influenced by available land,
crop or forest types and productivity. The amount
of land available for biomass depends on the
amount of land used for agricultural and forestry
products and that devoted to nature reserves.
The demand for food, which is a function of
population and diet, has a direct impact on land
use and availability to grow primary biomass

resources for bioenergy. The amount of biomass
produced is a function of the quality of the land,
the climate, water availability and management
practices.
There are potential risks in the expansion of
biomass production into areas that provide valuable
ecosystems that support high biodiversity and may
result in nutrient pollution.
Bioenergy production costs are a function of biomass
feedstock, labour, transportation, capital and
operating costs.
The cost of feedstocks depends on whether it is a
primary biomass (energy crop) or residue biomass
from an agricultural, forestry or urban activity. Cost
variations are due to input and harvest costs from
production systems. Solid biomass can be bulky,
difficult to handle and transport, and may decay over
time. Onsite pre-processing of materials, such as
chips or wood pellets, may increase the labour and
processing costs, but reduce transport and storage
costs.
Bioenergy becomes a competitive alternative in
situations where cheap or negative-cost residues
or wastes are available and used onsite (IEA
Bioenergy 2007). The most economical bioenergy
production model is the production of energy at the
biomass location such as at landfill and sewage
sites, paper mills, sawmills or sugar mills.
In Australia, a large proportion of bioenergy
production occurs in small to medium cogeneration
plants built at sugar mills and other food processing
plants that have access to significant low cost
biomass waste streams.
Large scale bioenergy production requires further
development in conversion technologies and biomass
production to be competitive with fossil fuels (IEA
Bioenergy 2007).

Electricity and heat generation through biomass
combustion is a mature, efficient and reliable
technology. In cases where low cost feedstocks are
available for co-firing schemes, electricity and heat
production from bioenergy is cost competitive with
fossil fuels (IEA Bioenergy 2007).
An assessment of the electricity generation costs
from biomass was undertaken by IEA Bioenergy
(2007), which provides a comparison for three
biomass types. It should be noted that the actual
costs may not be directly applicable to Australia. In
the short term (about 5 years) the costs of generating
electricity range from 0.030.15 (US$0.040.21)/
kilowatt hour (kWh) (in 2007 dollars), depending
on the biomass feedstock, technology and scale
of generation plant (table 12.9). In the longer term
(more than 20 years) biomass electricity costs are
expected to decline to 0.020.08 (US$0.030.11)/
kWh (in 2007 dollars) with advances in technologies.
The main variability in costs will arise from the cost of
biomass supply.
A relatively low capital cost option for improving
system efficiency and reducing carbon emissions is
retrofitting of co-firing boilers with biomass delivery
systems. Total costs vary depending on the type
and condition of the boiler being modified and the
biomass delivery system, with separate feed systems
costing up to four times as much as a blended
delivery system (Grabowski 2004). In the United
States, the annual fuel costs are often lower in cofiring plants than in plants burning pure coal. These
annual savings can result in payback periods on
initial investment of less than 10 years and reduce
production costs between $US0.020.22/kWh. In
addition, the use of biomass as a supplementary
fuel in coal-fired plants reduces sulphur dioxide and
nitrogen oxides emissions (EESI 2009a).
Table 12.9 Electricity generation costs for three bioenergy resources

Biomass
Short term
Longer term
Organic waste
municipal solid waste
Less than 0.030.05 (US$0.040.07)/kWh

For state-of-the-art incineration and
co-combustion technology
Similar range
Improvements in efficiency and
environmental performance
Residues
forests
agriculture
0.040.12 (US$0.050.16)/kWh
Lower cost in combined heat and power
operations
Major variable is biomass supply costs
0.020.08 (US$0.030.11)/kWh
Major variable is biomass supply costs
Energy crops
oilseeds
sugar/starch
short rotation cropping trees
0.050.15 (US$0.070.21)/kWh
High costs for small scale plants,
lower costs for large scale over 100 MW
state-of-the-art combustion
0.030.08 (US$0.040.11)/kWh
Low costs due to advanced co-firing
schemes and integration gasification using
combined cycle technology over 100 MW
Note: Costs in 2007 dollars

Source: IEA Bioenergy 2007
323
Transport biofuels
The main component of biofuels production costs
is the cost of feedstock, which varies considerably
according to the type of feedstock used. Low cost
biofuels can be produced from crops grown in the
most suitable climate zones and using commercially
available technologies, such as ethanol from sugar
cane grown in tropical regions. Biofuel production
costs are low in Brazil, for example, largely because
of the availability of low cost sugar cane. Sugar
cane ethanol in Brazil has a lower cost than petrol
(Worldwatch Institute 2006). Ethanol production
costs vary significantly subject to the location and
the feedstock used. Sugar cane ethanol produced
in Brazil costs about US$0.20 per litre, while in the
United Kingdom costs were about US$0.81 per litre
(IEA 2006b).
The production cost of first generation biofuels in
Australia is highly variable due to variations in the
cost of feedstock. Ethanol from starch waste and
C-molasses and biodiesel from used cooking oil can
be produced at a cost less than A$0.45 per litre, in
2007 dollars (comparative cost of oil at US$40 per
barrel). Ethanol from sugar and grain and biodiesel
from tallow and oilseed crops (canola) can be
produced from less than A$0.80 per litre, in 2007
dollars (comparative cost of oil at US$80 per barrel)
(OConnell et al. 2007).
324
In Australia, expansion and construction of first

generation biofuel facilities were planned in 2007 as
a result of government subsidies and high oil prices.
However, many of these plans were postponed due
to high feedstock prices and falling crude oil prices
at the end of 2008. Uncertainty about future changes
in oil and feedstock prices continues to restrict
investment in new capacity.
The development of second generation biofuels
from lignocellulosic biomass will not only increase
the range of low cost feedstocks but will increase
conversion efficiencies and lower production costs
(IEA Bioenergy 2007).
The cost of second generation lignocellulosic biofuel
production is estimated to be less than US$1.00
per litre. Cost is expected to decrease to between
US$0.55 and US$0.70 per litre in the long-term
depending on the technologies and improvements
Table 12.10 Production costs for second generation
biofuels
Second generation
technologies
Production cost
US$/litre gasoline equivalent
2010
2030
Biochemical ethanol
0.800.90
0.550.65
Biomass to Liquids
(BTL) diesel
1.001.20
0.600.70
Source: IEA Bioenergy 2008
in techniques, up-scaling of production facilities

and lower feedstock cost using biomass residues
(table 12.10).
Technology developments more efficient,

using a greater range of non-edible biomass
resources
There is a range of technologies currently available
and in development for converting biomass into
energy (box 12.1). Energy is released either in the
form of heat or is converted into another energy form
such as liquid biofuels or biogas.

Electricity and heat are generated by combustion,
cogeneration and gasification of biomass and from
methane gas captured from landfill and sewage
facilities. The burning of solid biomass is the
dominant method of energy conversion for electricity
and heat production. Increased efficiency can be
gained through fluidised bed combustion and co-firing
of biomass (e.g. wood residue) with coal. There is
potential to increase bioenergy production through
utilisation of under-exploited biomass residues and
wastes from forestry and wood processing facilities.
These residue and waste resources, if used more
effectively, can assist in the reduction of greenhouse
gas emissions.
Transport biofuels
First generation biofuels are mainly produced from
sugar and starch by-products, grain oil crops, used
cooking oil or animal fat (box 12.2). Given the
limited supply of these feedstocks in Australia,
first generation biofuels will not be able to supply a
large proportion of transport fuel needs until second
generation technologies become commercially viable.
Second generation biofuels are the subject of
active RD&D (box 12.2). They are produced from
lignocellulosic feedstocks such as crop and forest
residues and wood processing wastes, which do
not compete directly with food crops. In Australia,
second generation biofuels show promise for making
a greater contribution to transport fuel supply, but this
is dependent on sustainable production of biomass
at a competitive cost (Wild 2009).
The farming of algae to produce biofuels is an area
of active research worldwide. Algae cultivation is
not new technology it has been used to produce
high value nutraceuticals such as beta-carotene,
and spirulina. Both microalgae and macroalgae
(e.g. seaweed) are being investigated as feedstocks
for biofuels. Algae can be grown on non-arable
land, in saline and waste water and has a high oil
yield. Microalgae can fix CO2 from the atmosphere,
power plants and industrial processes and soluble
carbonate, however only a small number of
microalgae are tolerant to high levels of sulphur
oxides and nitric oxides present in flue gases. There
Box 12.1 Bioenergy technologies for electricity and heat generation

Thermal conversion uses heat as the dominant
mechanism to convert biomass to energy.
Combustion is the simplest method by which
biomass can be used for energy and has been
used for millennia to provide heat. Conventional
combustion technologies involve biomass being burnt
in the presence of air in a boiler to generate heat to
produce hot air, hot water or steam, which is used in
a steam turbine to generation electricity.
Combustion technologies
The three main biomass combustion conversion
technologies are grate boilers, fluidised bed
combustion (gasification) and co-firing in utility boilers.
Grate boiler technology is the oldest combustion
principle and was the most common design of smallsize boilers. It remains popular for relatively small
boilers (less than 5 MW) in countries using fuels such
as wood pellets, straw and municipal solid waste
(IEA 2008).
Fluidised bed combustion uses upward blowing jets
of air to suspend solid fuels during the combustion
process for increased efficiency. The process controls
the supply of oxygen and/or steam. The biomass is
devolatilised and combusted to produce a biogas
that can be burnt for heat or used in a gas turbine for
There are two main technologies, bubbling
fluidised bed (BFB) and circulating fluidised bed
(CFB) technologies. BFB combustion offers better
temperature control and is more suitable for
non-homogeneous biomass. CFB combustion
uses pulverised fuel that does not require a high
temperature flame and allows better control of the
furnace temperature.
Co-firing refers to the simultaneous combustion of
a biomass feedstock and a base fuel (e.g. coal) to
produce energy. The most common biomass include
low value wood, crop residues and municipal waste.
Most biomass feedstock must undergo processing
before it can be utilised for co-firing (EESI 2009a).
Processed solid biomass is added to the co-fired
boilers along with the fossil fuel. It helps reduce
reliance on a finite resource and can make a
significant contribution to CO2 emission reductions
(Massachusetts Technology Collaborative 2009; IEA
2006a).
Biomass co-firing in modern, large scale coal
power plants is efficient and can be cost effective.
The technique has been successfully demonstrated
in more than 150 installations worldwide. About a
hundred of these are operating in Europe, around
40 in the United States and a few in Australia.
A number of fuels such as crop residues, energy
crops and woody biomass have been co-fired.
The proportion of biomass in the fuel mix has
ranged between 0.5 and 10 per cent in energy
terms (IEA 2008).
For co-firing of up to 10 per cent of biomass mixed

with coal or fed through the coal feeding system, only
minor changes in the handling equipment are needed.
For biomass exceeding 10 per cent or if biomass and
coal are burned separately, changes in mills, burners
and dryers are needed.
The development of biomass fuel preparation
and drying technologies such as torrefaction
(thermochemical treatment that lowers the moisture
content and increases the energy content) and
pelletising of biomass, increase the efficiency of
plants. In addition, the biomass is very compact,
stable and easier to transport, store and handle.
Wood pellets are rapidly becoming an important
source of fuel for co-fired plants. Wood pellets or
Densified Biomass Fuel (DBF) are manufactured
from low value trees and from sawdust and other
pulp waste. Wood pellets are increasingly used as
a renewable fuel for power generation in countries
such as Japan, Canada, South Africa and particularly
in Europe. Much of the new generation capacity in
Europe is based on dedicated pellet-fuelled combined
heat and power plants. European production has
been based on both scarce sawmill waste and,
increasingly, imports. In Australia, wood pellet use
remains limited but supply to the domestic market
and export market is expected to increase.
Cogeneration technology
In the most efficient electricity generation plant
around 30 per cent of the energy in the biomass is
converted into electricity; the rest is lost into the air
and water. Cogeneration or combined heat and power
(CHP) plants have greater conversion efficiencies as
they produce both electricity and process heat.
There are a number of different types of cogeneration
technology. For many years, all cogeneration
installations were based on the use of conventional
boilers, with steam turbines for electricity generation.
Gas turbine technology has largely superseded
steam turbine technology for medium size installation
(Saddler et al. 2004). Bagasse, sludge gas from
sewage treatment plants and methane from landfill
sites are used as fuel in cogeneration plants. Where
a cogeneration plant is powered by waste gases,
fugitive gases are captured and utilised to drive
gas turbines which in turn generate electricity. In
Australia, sugar mills run cogeneration plants which
are fuelled by bagasse left over after crushing the
sugar cane.
Trigeneration technology
Trigeneration technology provides cooling in addition
to heat and electricity generation. The process
waste heat can be usefully applied for heating in
winter and, via an absorption chiller/refrigation,
325
for cooling in summer. Refrigeration and airconditioning normally require a compressor driven by
electricity. The absorption chiller uses a heat source
to provide energy to drive the cooling system. The
combination of technologies to convert waste heat
into cooling can reduce peak summer electricity
consumption and greenhouse gas emissions from
air-conditioning by about 25 per cent.
A small scale trigeneration option is an Organic
Rankine Cycle (ORC) engine which uses an organic
fluid with a low boiling point, rather than steam
and hence lower cost involved in gathering heat.
A biomass-fired ORC trigeneration system is able
to generate electricity and provide heating and
cooling demands.
Gasification and pyrolysis technologies

(thermochemical processes)
The use of gasification is more efficient for energy
recovery in terms of electricity generation than
traditional combustion. In gasification, solid biomass
is heated to high temperatures (8001000C)
in a gasifier and converted to a syngas primarily
composed of hydrogen, carbon monoxide, carbon
dioxide, water vapour and methane. There are lower
amounts of sodium oxides, nitrous oxides and dioxins
emissions than in a traditional combustion process.
326
The syngas can be used in combustion engines

(10kW to 10 MW) with efficiency of 30 to 50 per
cent in gas turbines or combined cycles (IEA 2007a).
Biomass integrated gasification/gas turbines (BIG/
GT) are being developed. Tar elimination is one of the
areas of research, which is expected to be overcome
are challenges limiting the commercial development

of algae biofuels such as algae species that balances
requirements of biofuel production, equipment and
structures needed to grow large quantities of algae
and the negative energy balance after accounting for
water pumping, harvesting and extraction.
Research is being undertaken into production
systems such as open ponds and closed loop
systems, algal strains and fertilisation with nutrients
and CO2. Open pond systems (e.g. sewage ponds)
require an algae strain that is resilient to wide swings
in temperature and pH, and competition from invasive
algae and bacteria. In a closed system (not exposed
to open air) also referred to as a photobioreactor,
nutrient-laden water is pumped through plastic tubes
that are exposed to sunlight. Photobioreactors have
several advantages over open systems by reducing
contamination by organisms blown in by the air,
controlled conditions (pH, light, temperature and CO2)
and preventing water evaporation.
In Australia, there are a number of R&D projects
investigating biofuel technologies from microalgae.
in the medium term. The first integrated gasification

combined cycle (IGCC) plant running on 100 per cent
biomass (straw) has been successfully operated in
Sweden.
Pyrolysis is thermal degradation of biomass to
produce bio-oil, syngas and charcoal at medium
temperatures (350800C) in the absence of air.
Pyrolysis encounters technical difficulties, such as
effective heat transfer between the heat carrier and
biomass particles or the quenching of vapours to
stop further reactions that result in bio-oil quality
variations, which have prevented its implementation
on a commercial-scale.
Anaerobic digestion technology

Anaerobic digestion is a technique used for
producing biogas which is used commercially
worldwide, especially for waste effluents such as
waste water, sewage sludge and municipal solid
waste. Anaerobic bacteria digest organic material
in the absence of oxygen and produce biogas.
Anaerobic processes can be managed in a digester
or airtight tank or covered lagoon. There is increasing
use of this technology in small scale, off grid
applications at the domestic and farm-scale.
In modern landfill sites, methane production ranges
between 50 and 100 kg per ton of municipal solid
waste (MSW). In general, some 50 per cent of biogas
can be recovered and used for power and heat
generation. After purification and upgrading, biogas
can be used in heat plants and stationary engines,
fed into the natural gas grid or used as a transport
fuel (compressed natural gas) (IEA 2007b).
In Victoria, the University of Melbourne is researching

efficient separation, processing and utilisation of
algal biomass. Algal Fuels Consortium is developing
a pilot-scale biorefinery in South Australia for
sustainable microalgal biofuels. A joint project between
Murdoch University, Western Australia, and University
of Adelaide, South Australia is working on all steps
in the process of microalgal biofuels production,
from microalgae culture, harvesting of the algae and
extraction of oil for biofuels production. Construction
commenced in January 2010 on a pilot plant to test
the whole process on a larger scale in Karratha,
north-west Western Australia, and is expected to be
operational by July 2010.
Third generation technologies are in the R&D
stage. The technology involves the development
of lignocellulosic biorefineries that produce large
volumes of low cost biofuel and the overall process
is supported through the production of bioenergy
and high value bioproducts. Internationally there is
commercial and R&D interest in developing biobased products from biorefineries. DuPont and
the University of Tennessee plan to construct a
Box 12.2 Biofuel technologies for transport

Conversion technologies use a range of biochemical
and thermochemical processes to convert biomass
into biofuels.
First generation technologies use conventional
processes, fermentation of sugar and starch crops
for ethanol production and trans-esterification
of oilseed crops, used cooking oil or animal fat
(e.g. beef tallow) for biodiesel. Trans-esterification
involves reaction of an oily feedstock with an alcohol
(methanol or ethanol) and a catalyst to form esters
(biodiesel) and glycerol.
Advances in first generation biofuels are focused
on feedstocks, such as GM crops, new non-edible
oilseeds and new sugar (agave) crops. The use
of non-edible oil seed plants, such as Jatropha,
has been explored as potential feedstock in the
Philippines and India. Jatropha production may be
expanded without directly competing with natural
forests or high-value agriculture lands used for food
production as it can grown on less fertile land (FAO
2008). In Australia, Jatropha is banned as it is an
invasive plant. However, there is potential for using
other non-edible oilseed plants (e.g. Pongamia and
Karanja).
pilot-scale biorefinery in Tennessee, United States

(The University of Tennessee 2009). The National
Renewable Energy Laboratory in the United States
is involved with six major biorefinery development
projects that are focused on integrating the
production of biomass-derived fuels and other
products in a single facility (National Renewable
Energy Laboratory 2009).
Currently in Australia, only a few companies are
pursuing the lignocellulosic biorefinery model.
The Oil Mallee project successfully uses Mallee
eucalypts for producing eucalyptus oil, activated
carbon and bioenergy from 1 kW integrated wood
processing demonstration plant in Narrogin, Western
Australia (Oil Mallee Association 2009). The Mallee
eucalypts are planted as a complementary crop on
land used for growing grain. The re-sprouting ability of
the Mallee eucalypts allow for coppicing (harvesting
of branches) every second year indefinitely without
replanting. It also provides an environmental benefit
as the deep mallee roots soak up ground water
and assist in mitigating dryland salinity (Oil Mallee
Association 2009).
Biomass resources reliable and

environmentally sustainable supply
Biomass production is a significant potential source
of renewable energy that can provide greenhouse gas
reduction benefits when replacing fossil fuels. However,
a key factor in the growth of the bioenergy sector is
Second generation technologies use biochemical

and thermochemical processes to convert
lignocellulosic and algae feedstocks to biofuels.
Biochemical processes use enzymes and microorganisms to convert feedstocks to sugar prior
to fermentation to produce ethanol, butanol or
potentially other fuels. Thermochemical processes
uses pyrolysis and gasification technologies.
Pyrolysis processes produce bio-oil, syngas and
biochar. The bio-oil is unstable and requires further
refining to produce petrol, biodiesel and other high
value chemicals. Gasification methods produce
syngas, which can be further processed using
Fischer-Tropsch synthesis to produce syndiesel and
aviation biofuels.
In Australia, R&D into second generation
technologies and feedstocks for biofuels is being
undertaken (section 12.4.3). CSIROs Energy
Transformed Flagship is conducting research into
the potential for a sustainable and economically
viable second generation biofuels industry. It has
a research program covering sustainable biomass
production, thermochemical conversion, enzymatic
conversion and algal fuels (CSIRO 2009).
the sustainable management of biomass exploitation

and the avoidance of potential negative environmental
impacts of bioenergy feedstocks production.
The expansion of the bioenergy industry can provide
greenhouse gas savings and other environmental
benefits, such as improved biodiversity as well as
opportunities for social and economic development
in rural communities. The greenhouse gas savings
depend on the biomass feedstock cultivation method,
changes in land use, the quantity of fossil fuel
inputs and the technology used. Waste and residue
biomass does not require significant energy input
and generally has lower greenhouse emissions when
compared to energy crops.
However, the expansion of bioenergy production
creates some challenges, such as potential
competition for land use, and biomass use for food
and stockfeed and potential impacts on biodiversity.
As already noted, the availability of biomass is
also influenced by population growth, diet, water
availability, agricultural density and the environment
(Hoogwijk 2006).
Energy crops are dependent on land being available
that is not being used for forestry and agricultural
products, environmental protection or urban areas.
The amount of biomass produced (crop productivity)
is a function of the quality of the land, the climate,
water resources and management practices.
Increased use of fertilisers and pest control to
327
improve crop yields may lead to increased pollution

from nutrient and biocides/pesticides.
Residues from forests and wood processing and
organic waste streams are large untapped resources,
and effective and sustainable use of these resources
can make a contribution to energy supply while
reducing waste disposal problems and avoiding
the potential environmental impacts of dedicated
bioenergy crops.

In Australia, bioenergy for electricity and heat
generation is produced predominantly from byproducts of sugar production and waste streams.
Future energy crops may include tree crops, woody
weeds and algae as well as expansion into crop and
food residues. The main factors are technology costs,
reliable supply and consistent quality of biomass.
In urban regions, capturing waste gas from landfill
and sewage facilities provides dual benefits of
generating bioenergy and eliminating methane
emissions. The waste stream supplies to these
facilities are relatively constant and if waste gases
are not collected and used for bioenergy production,
the gas would be flared or vented into
the atmosphere. Generation of electricity and heat
from biogas will reduce emissions and can replace
the use of fossil fuels as clean, cost effective,
renewable energy.
328
Similarly, conversion of animal wastes to biogas

can also provide energy and reduce environmental
problems associated with animal wastes. The
anaerobic digestion process can control manure
odour and reduce harmful water run-off.
The Berrybank piggery facility near Ballarat, Victoria
has a 0.225 MW plant that has been generating
3.5MWh of electricity per day from animal manure
since 1991. The Clean Energy Council (2008)
estimates that about half of the existing pig herd in
Australia is at piggeries of sufficient scale to allow
economic implementation of energy generation from
the waste stream, with a long-term potential from this
industry of about 200 Gigawatt-hours (GWh) per year.
Forestry and agricultural residue and wood waste
bioenergy plants rely on a constant supply and consistent
grade of biomass. Wood waste for electricity generation
is predominantly by co-fired coal plants. Forest residues,
wood process wastes and municipal solid wastes have
the potential to be used as lignocellulosic feedstock in
second generation technologies.
Transport biofuels
First generation biofuels from energy crops are
constrained by the amount of land available and the
limited supply of sugar and starch by-products, animal
fats and used cooking oil feedstocks. For biofuels to
contribute significantly to transport fuel consumption,
a large proportion of arable land would have to be

devoted to energy crops production. In 2005, the
European Union (EU) used 3 per cent of its total arable
land for biofuel feedstocks producing 4.9 billion litres
of biofuels, which represented around 1 per cent of
liquid fuels consumption in the EU transport sector
(European Commission 2007; IEA 2007b).
First generation biofuels from energy crops require
sustainable agricultural practices to minimise
environment impacts, the adoption of crop rotation
with an energy crop diversifies the crops grown, which
can improve the land for traditional cropping and
provide a high value crop (FAO 2008). In Australia,
biofuel production is currently too low to affect the
production of agricultural commodities.
Second generation biofuels will be produced from
specialised energy crops, such as tree crops and
algae, as well as from residue and the waste
streams. The utilisation of residue and waste
material for biofuels requires no additional land.
Second generation biofuel feedstocks may also
be grown on less productive lands and degraded
agricultural land that do not compete directly
with growing food, stockfeed and fibre crops
(IEA Bioenergy 2008). Some second generation
feedstocks, such as algae and oil mallee, do not
compete for freshwater resources.
Worldwide, investment in second generation
technologies is being undertaken to ensure these
characteristics environmental and economic viability
and avoidance of competition for productive land
with food and fibre production are achievable and
therefore that the future production of bioenergy can
proceed in a sustainable way.
12.4.2 Outlook for bioenergy resources

The bioenergy supply chain is complex because of
its interaction with other supply chains (such as
agricultural and forestry). There is scope to optimise
current production systems for the bioenergy market
without diverting biomass from current uses (e.g.
plantation thinnings). The production of second
generation feedstocks on less productive or underutilised lands could potentially provide economic,
environmental and social benefits (OConnell et
al. 2009a). The use of such land may provide
opportunities for: farmers to diversify existing
systems; the development of industries in rural
regions; and improvements in biodiversity. Currently,
second generation biofuels are not commercially
competitive in any country. The transition from
first to second generation technologies will require
significant R&D investment which, in turn, will only
be attracted by an industry with a future that is
significant and sustainable in the longer term. The
industry needs to demonstrate that the potential it
offers meets these criteria.
Table 12.11 Potential for stationary bioenergy generation in Australia

Biomass
Quantity
200506
Conversion technologies
Electricity generation GWh/yr

2010
2020
2050
AD/RGE
90
848
207
207
Agricultural related wastes

Poultry
94 384 000 population
Cattle (feedlots)
870 025 population
AD/RGE; DC/ST
112
442
Pigs
AD/RGE
22
205
Dairy cows
AD/RGE
22
89
Abattoirs
1 285 000 t
AD/RGE
337
1773
Nut shells
DC/ T
Stubble residues from

grain and cotton crops
24 000 000 t
DC/ST; G/GT; P
Bagasse (sugar cane

residue)
5 000 000 t
DC/ST
1200
3000
4600
Sugar cane trash, tops and

leaves
4 000 000 t
DC/ST
165
3200
Algae
AD/RGE; P
Oil mallee
DC/ST; G/GT; P
112
484
DC/ST; G/GT; P
83
20
1
47 000
Energy crops
Woody weeds
Camphor laurel
Forest residues
Native forest
(public and private)
2 200 000 t
Plantation
(public and private)
3 800 000 t
Sawmill and wood chip

residues
2 800 000 t
329
AD/RGE; DC/ST;
briquetting and pelletising;
G/GT; charcoal production;
Co-firing
79
2442
4554
Pulp and paper mills wastes

Black liquor
DC/ST
285
365
365
Wood waste
DC/ST
60
85
85
Recycled paper wet wastes
AD/RGE
Paper recycling wastes
DC/ST
12
48
48
AD/RGE
13
126
565
DC/ST
16
141
189
37
186
29
84
275
DC/ST
1548
38
191
Urban waste
Food and other organics
2 890 000 t
Garden organics
2 250 000 t
Paper and cardboard
2 310 000 t
Wood/timber
1 630 000 t
DC/ST
45
295
1366
Landfill gas
9 460 000 t
Spark ignition engine;

co-firing; flaring
772
1880
3420
Sewage gas
735 454 t
AD/RGE; DC/ST
57
901
929
P
AD/RGE
AD = Anaerobic digestion; RGE = reciprocating gas engine; P = Pyrolysis; DC = Direct combustion; ST = steam turbine; G = Gasification;
GT = Gas turbine
Source: Clean Energy Council 2008

Currently electricity generation is predominantly from
bagasse and landfill and sewage sites and to a lesser
degree wood waste, pulp and paper mill waste. The
Clean Energy Council (2008) identified significant
potential for growth in bioenergy production from
waste streams, such as landfill and sewage gas and
urban waste.
An appraisal of bioenergy resources, primarily waste
streams, for stationary energy was undertaken by
the Clean Energy Council in 2008 to estimate the
potential by 2020 and in the long-term (2050).
The assessment is based on biomass quantities
potentially available in 200506. The biomass
feedstocks are grouped into agricultural related
wastes, energy crops, woody weeds, forest residues,
pulp and paper mill wastes, and urban wastes (table
12.11).
Agricultural related wastes in total are a very large
resource but currently are not used as feedstocks.
The resources are widely dispersed and can have a
range of alternative uses including composting and
feed for animals.
330
The sugar cane industry, already one of the few

industries self sufficient in energy through its use
of bagasse-fired cogeneration, has the potential
to increase electricity generation efficiency with
integrated gasification combined cycle technology
as well as biomass expansion to include sugar cane
trash, tops and leaves.
Crops residues from grain and cotton crops are a
potential resource. However, crops can be subject to
large annual variations of quantities produced due
to environmental and climatic factors. An option to
reduce the variability of resources is to process a
wide range of biomass material such as residues
from grain, rice, cotton crops and left-over plant
matter from vegetables and fruits.
The potential estimated stubble residues that can
be collected, taking into account that a proportion of
the crop is left on the land for maintenance of soil
health, is estimated to be 24 Mt per year. However,
the high cost of transport of a highly dispersed
resource means that there will be little or no
contribution from this sector to 2020. For this sector
to contribute to energy production there needs to be
further investigation of energy conversion processes
(e.g. gasification and pyrolysis) and ways to reduce
transport costs. A long-term estimate of potential
energy is 47 000 GWh per year (Clean Energy Council
2008).
Large scale livestock feedlots, piggeries, dairy
and poultry farms with their mixed waste streams
of animal bedding and manure are suitable for
generating bioenergy. Waste material can be used
to produce stationary energy and assist in reducing
environmental problems from waste disposal,

methane emissions and pollution of water supplies.
The Clean Energy Council estimated that the longterm potential for feedlot cattle and piggeries are
about 440 GWh per year and 200 GWh per year,
respectively. However, there are uncertainties with
moisture content and suitability for combustion or
anaerobic digestion. Poultry farm waste is estimated
to have a long-term potential in the range of 840 GWh
per year. This estimate does not take into account
that some operations may be too small to be viable
or that poultry manure is used for fertiliser.
In addition, there is also the potential of solid
wastes from abattoirs. The Clean Energy Council
indicated that there are approximately 0.77 Mt
to 1.8 Mt per year of solid waste produced from
about 150 abattoirs. If 30 abattoirs implement
anaerobic digestion cogeneration plants, by 2020
these projects have the potential to produce about
340GWh per year, with a long-term estimate of about
1770 GWh per year.
Native forest wood waste is assumed to remain
relatively constant: however the potential from
plantation wood waste should increase in line with
plantation expansion. Australian governments, at
all levels, have established regulatory mechanisms
concerning the eligibility for forest wood waste
for electricity generation in order to manage the
sustainable use of these products.
Urban waste, including food, garden, urban timber,
paper and cardboard wastes, is steadily growing and
has significant potential for energy generation. The
decomposition of these wastes in landfill results
in methane generation, which is not appropriately
captured and utilised, particularly in older and
smaller landfill sites. In 200203 approximately
9.5 Mt per year of organic urban waste was sent to
landfill. The potential electricity generation for 9 Mt of
urban waste is 103 GWh, with a long-term estimate
of about 4300 GWh (Clean Energy Council 2008).
There is potential for growth of biogas power
generation from landfill sites and sewage treatment
plants in urban and rural centres for local use.
Converting biogas to energy would provide dual
benefits of energy supply and reduced greenhouse
gas emissions. If these wastes are not collected
and used for bioenergy production, the gas would
be flared or vented into the atmosphere.
There are a number of potential energy crops that
may provide fuel for future bioenergy as well as
providing environmental benefits. The integration of
complementary energy crops and woody perennials
into existing agricultural systems may be able to
reduce dryland salinity and land erosion.
The Oil Mallee project in Western Australia
Table 12.12 Estimated energy and fuel yields for different feedstocks
Feedstock
Ethanol L/t
Biodiesel L/t
Synfuel* L/t
Electricity MWh/t
First Generation
Cereals
360
Oilseeds
400
Sugar cane
Molasses
280
Sugar
560
Second Generation
Cereals
335
246
1.02
Wood waste
240
246
1.35
Algae
495
0.27
Sugar cane
Whole plant
465
246
0.80
Bagasse
300
246
0.80
Sawmill residues
233
246
1.35
Harvest residues
233
246
1.35
Pulpwood
240
246
1.35
Bioenergy plantations
260
246
1.35
Grasses
323
246
1.02
Forestry
*Production using gasification, gas condition and cleaning followed by Fischer Tropsch synthesis and refining to produce syngasoline and
syndiesel
Source: OConnell et al. 2009b
successfully demonstrated the use of Mallee

eucalypts to produce eucalyptus oil, activated
carbon and generate electricity. Woody weeds, such
as Camphor Laurel, are abundant but either need
research into their suitability as feedstock, or are too
dispersed in nature to be economical to harvest.
R&D into algae is drawing attention because of its
potential high hydrocarbon content, high oil yields and
ability to be grown in saline and waste water. Algae
grown and harvested from purpose-built ponds and
photobioreactors has the potential to be a feedstock
for biofuels and power generation.
Transport biofuels
First generation biofuels are not expected to make
a large contribution to Australias future biofuels
supply as there is limited availability of low cost
first generation feedstocks. Second generation
technologies may provide a greater range of biomass
feedstocks and potential greenhouse gas emissions
savings. Second generation technologies will use
lignocellulosic material, specialised crops such as oil
mallee, non-food components of crops and algae.
OConnell et al. (2009b) estimated yields of biofuels
and electricity generation from different feedstock
for the first and second generation technologies
(table 12.12). The analysis was restricted to
Queensland and did not provide spatially explicit
analysis of biofuel feedstock production. However,
it does provide useful first cut estimates of the
possibilities. Current technologies can produce 280

to 560 litres of ethanol per tonne of biomass and
400 litres of biodiesel per tonne of oilseeds. The
second generation technologies will use a wider
range of biomass feedstocks to produce ethanol,
biodiesel, synfuel and generate electricity. That
report estimated that approximately 55 Mt of stubble
residue biomass per year can be produced based
on 20 per cent of the current 45 million hectares
of grazing and cropping land, and that there is
potentially about 6 tonnes of biomass per hectare
per year. This biomass resource could produce
approximately 82 TWh per year of electricity or 17 GL
per year of syngasoline and syndiesel.
12.4.3 Outlook for bioenergy market

Bioenergy has the potential to make a growing
contribution to Australias energy use, and to
electricity generation in particular. Australias current
bioenergy production is principally sourced from byproducts of production processes or waste products.
There are still under-utilised waste products that may
be used for bioenergy in the future.
In ABAREs latest energy projections, which include
the Renewable Energy Target, a 5 per cent emissions
reduction target, and other government policies,
bioenergy use in Australia is projected to increase by
60 per cent to 340 PJ in 202930, representing
an average annual growth rate of 2.2 per cent
(figure 12.15).
331
350
5.0
300
4.4
1.0
3.8
2
1.9
100
TWh
PJ
2.5
150
3.1
200
0.5
250
1.3
50
0.6
1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 202900
01
02
03
04
05
06
07
08
30
1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 202900
01
02
03
04
05
06
07
08
30
Year
Year
Bioenergy
consumption (PJ)
332
Share of
total (%)
AERA 12.2
Bioenergy electricity
generation (TWh)
Share of
total (%)
Figure 12.15 Projected primary consumption of

bioenergy

bioenergy
Source: ABARE 2009a; ABARE 2010
Source: ABARE; ABARE 2010
Australias large potential bioenergy resources,

the Renewable Energy Target and the potential
commercialisation of second generation technologies
are all expected to drive an increase in electricity
generation from bioenergy. However, growth is likely
to be constrained to some extent by competition
for land and water resources and logistical issues
associated with handling, transport and storage.
Some second generation feedstocks such as algae
and solid biomass wastes may substantially reduce
the problems associated with land use and water
resources.
AERA 12.3
There are several proposed bioenergy power plants

using a range of biomass feedstocks, such as
animal, municipal and sawmill and pulp mill wood
wastes and forestry and plantations residues. There
are research projects on methane capture systems
from uncovered effluent treatment lagoons and
energy generation from intensive animal industries
such as dairy farms, beef cattle feedlots and
piggeries.
Electricity generation from bioenergy (excluding

cogeneration) is projected to increase at an average
rate of 2.3 per cent per year from 2 TWh in 200708
to 3 TWh by 202930 (figure 12.16). More than
60 per cent of the projected growth in the use of
bioenergy for electricity generation is projected to
occur in Queensland.
In Victoria, there is a proposal to use fire-affected

tree residues from bushfire-affected areas.
TreePower Australia has undertaken a feasibility
study for a 1 MW biomass fired Organic Rankine
Cycle cogeneration power plant near Marysville,
Victoria. The company is considering a trigeneration
option, in which some (or all) of the heat output
would drive an absorption chiller process for
cooling outputs.
Bioenergy project developments
Transport biofuels
As at October 2009, there were three projects under

development in Australia (table 12.14). In Tasmania,
Gunns Ltd plans to develop a large cogeneration
power plant of 200 MW capacity at its Bell Bay pulp
mill. WA Biomass Pty Ltd plans to construct and
operate a 40 MW power plant fuelled by up to 380
000 tonnes per year of plantation waste in Western
Australia. National Biodiesel Ltd plans to construct a
soybean processing and biodiesel production facility
at Port Kembla, New South Wales. The facility will
process over a million tonnes of soybean per year
into high quality soybiodiesel, soybean meal (animal
feed) and pharmaceutical grade vegetable glycerine.
In August 2009, the Australian Government

announced A$15 million funding for projects
under the Second Generation Biofuels Research
and Development Program to demonstrate the
sustainable development of the biofuels industry.
The projects include researching biofuel from
microalgae, developing a pilot-scale biorefinery for
sustainable microalgal biofuels and value added
products, investigating the production of biofuels
from mallee biomass by pyrolysis, developing a sugar
cane biomass input system for biofuel production
and commercial demonstration of lignocellulosics
to stable bio-oil.
In addition, there are a number of R&D projects

investigating bioenergy technologies and biomass
potential across Australia.
Rural Industries Research and Development

Corporation (RIRDC) has a Bioenergy, Bioproducts
and Energy program to conduct research into

Table 12.14 Bioenergy development projects, as at October 2009

Project
Company
Location
Status
Start up
Capacity
Capital
expenditure
A$million
Bell Bay Power

Plant
Gunns Ltd
North of
Launceston,
Tas
On hold due
to uncertainty
of pulp mill
construction
NA
200 MW
NA
WA Biomass
Power Plant
WA Biomass
Pty Ltd
Manjimup,
south west WA
Feasibility
study under
way
NA
40 MW
110
Soybean
Processing
and Biodiesel
Production
Facility
National
Biodiesel Ltd
Port Kembla,
NSW
Development
approval
NA
Soybiodiesel
288 ML per
year
240
Note: Only includes power generation projects for which generation capacity is proposed to exceed 30 MW
Source: ABARE 2009b
and develop sustainable and profitable bioenergy

and bioproducts industries. Research has been
completed on identifying and developing Australian
native species as biofuel crops and research is
in progress in evaluating biodiesel potential of
Australian native plants, Indian mustard seed and
biofuel production of giant reed grass. RIRDC is
compiling a detailed listing of projects currently
underway in Australia.
12.5 References
The National Collaborative Research Infrastructure

Strategy (NCRIS), an Australian and State government
partnership is enhancing Australias capacity to
produce biofuels derived from non-food biomass.
NCRIS involves the development of five integrated
sites to provide researchers with access to quality
facilities, technologically advanced equipment, and
technical expertise. Macquarie University, University
of Sydney and University of New South Wales are
providing access to facilities for the conversion of
lignocellulosic and microalgae biomass to biofuels
(ethanol and biodiesel). Two pilot-scale manufacturing
facilities are also being established;
Batten D and OConnell D, 2007, Biofuels in Australia:

Some economic and policy considerations, RIRDC
Publication No07/177, Rural Industries Research and
Development Corporation and CSIRO, Canberra
a biomass biorefinery at Queensland University

of Technology, for the conversion of lignocellulosic
biomass to ethanol, lignin and other commodities
and;
a photobioreactor facility at South Australian
Research and Development Institute for the
demonstration of microalgae biomass culture
for biodiesel production.
The Biofuels Cooperative Research Centre, an
initiative of the BioEnergy Research Institute at
Southern Cross University is researching non-food
crops that will grow with a reduced reliance on water,
such as Australian native species, which have the
advantage of adaptable for marginal growing areas.

Economics), 2010, Australian energy projections to
202930, ABARE research report 10.02, prepared for the
(forthcoming)
ABARE, 2009a, Australian energy statistics, Canberra,
August
ABARE, 2009b, Electricity generation major development
Clean Energy Council, 2008, Australian bioenergy

road map and biomass resource appraisal, <http://
cleanenergycouncil.org.au/bioenergy/>
CSIRO, 2009, Natural Research Flagships
Energy Transformed, <http://www.csiro.au/org/
EnergyTransformedFlagship.html>
EESI (Environmental and Energy Study Institute), 2009a,
Issue brief: Biomass co-firing: A transition to a low carbon
future, March
EESI, 2009b, Issue Brief: Reconsidering municipal solid
waste as a renewable energy feedstock, July
European Commission, 2007, Biofuels in the European
Union: An agricultural perspective, European Commission
Directorate-General for Agriculture and Rural Development,
Brussels
FAO (Food and Agriculture Organization of the United
Nations), 2008, Biofuels: prospects, risks and
opportunities, The State of Food and Agriculture, Rome
Geoscience Australia, 2009, Renewable Energy Generators
in Australia, on behalf of Department of Environment, Water,
Heritage and the Arts <http://www.ga.gov.au/renewable>
Grabowski P, 2004, Biomass co-firing: A presentation to
the Department of Energy and United States Department of
Agriculture Technical Advisory Committee, 11 March
Hoogwijk M, 2006, Global biomass availability: Assumption
and conditions, IEA Bioenergy ExCo58, 4 October
333
IEA (International Energy Agency), 2009a, World energy

balances (2009 edition), OECD/IEA, Paris
IEA, 2009b, World energy outlook 2009, OECD/IEA, Paris
IEA, 2008, Energy technology perspectives 2008, OECD/
IEA, Paris
IEA, 2007a, IEA energy technology essentials: Biomass for
power generation and CHP, OECD/IEA, Paris, January
IEA, 2007b, IEA energy technology essentials: Biofuels
production, OECD/IEA, Paris, January
IEA, 2006a, Energy technology perspectives 2006, OECD/
IEA, Paris
OConnell D, Batten D, OConnor M, May B, Raison J,

Keating B, Beer T, Braid A, Haritos V, Begley C, Poole M,
Poulton P, Graham S, Dunlop M, Grant T, Campbell P and
Lamb D, 2007, Biofuels in Australia an overview of issues
and prospects, Rural Industries Research and Development
Corporation and CSIRO, Canberra
IEA, 2006b, Renewable energy: R&D priorities insights from

IEA technology programmes 2006, OECD/IEA, Paris
Oil Mallee Association, 2009, The oil mallee project,

Narrogin bioenergy plant, accessed December 2009,
<http://oilmallee.org.au/index.html>
IEA Bioenergy, 2009a, Bioenergy a sustainable and

reliable energy source: A review of status and prospects,
OECD/IEA, Paris
REN21, 2009, Renewables Global Status Report: 2009

Update, Paris <http://www.ren21.net/pdf/RE_GSR_2009_
Update.pdf>
IEA Bioenergy, 2009b, Bioenergy a sustainable and

reliable energy source: Main report, OECD/IEA, Paris,
December
Saddler H, Diesendorf M and Denniss R, 2004, A clean

energy future for Australia, Energy Strategies for the Clean
Energy Future Group, <http://www.enerstrat.com.au>
IEA Bioenergy, 2008, From 1st to 2nd generation biofuel

technologies: An overview of current industry and RD&D
activities, OECD/IEA, Paris, November
Stucley CR, Schuck SM, Sims RE, Larsen PL, Turvey ND and
Marine BE, 2004, Biomass energy production in Australia:
Status, costs and opportunities for major technologies,
RIRDC Publication No04/031, Rural Industries Research
and Development Corporation, Bioenergy Australia, Canberra
IEA Bioenergy, 2007, Potential contribution of bioenergy to

the worlds future energy demand, OECD/IEA, Paris
Massachusetts Technology Collaborative, 2009, Bioenergy
technologies, <http://www.masstech.org/cleanenergy/
biomass/technology.htm>
334
S, Battaglia M, Grundy M, and Keating B, (eds), An analysis

of greenhouse gas mitigation and carbon biosequestration
opportunities from rural land use, Report to the Queensland
state government, June, <http://www.csiro.au/resources/
carbon-and-rural-land-use-report.html>
National Renewable Energy Laboratory, 2009, Biomass

research: What is a biorefinery? <http://www.nrel.gov/
biomass/biorefinery.html>
OConnell D, Braid A, Raison J, Handberg K, Cowie A,
Rodriguez L and George B, 2009a, Sustainable production
of bioenergy; A review of global bioenergy sustainability
frameworks and assessment systems, RIRDC Publication
No09/167, Rural Industries Research and Development
Corporation and CSIRO, Canberra
OConnell D, May B, Farine D, Raison J, Herr A, OConnor
M, Campbell PK, Taylor J, Dunlop M, Poole M and Crawford
D, 2009b, Substitution of fossil fuels with production of
biofuel and bioenergy from renewable resources; In Eady
The University of Tennessee, 2009, Office of Bioenergy

Programs, Biorefinery groundbreaking, accessed December
2009, <http://www.utbioenergy.org/TNBiofuelsInitiative/
Biorefinery+Groundbreaking.htm>
Warden AC and Haritos VS, 2008, Future biofuels for
Australia: Issues and opportunities for conversion of second
generation lignocellulosics, RIRDC Publication No8/117,
Rural Industries Research and Development Corporation,
Canberra
Wild A, 2009, Biofuels and competition in Australia, CSIRO,
accessed October 2009, <http://www.csiro.au/science/
biofuels-and-competition.html>
Worldwatch Institute, 2006, Biofuels for transportation:
Global potential and implications for energy and agriculture
in the 21st Century, <http://www.worldwatch.org/publs/
biofuels>
Appendices
Appendix A: Australian Energy Resource Assessment

Terms of Reference
A comprehensive and integrated assessment of
Australias energy resources will be developed to
support industry investment decision-making and
government policy development. The Department
of Resources, Energy and Tourism has jointly
commissioned Geoscience Australia and the
Australian Bureau of Agricultural and Resource
Economics to undertake the assessment.
The assessment will:
1) Provide a comprehensive and integrated
compilation and assessment of energy resources
within Australias economic zones to inform
future industry investment analysis and decision
making and government policy development.
This information will relate to the exploration,
development and delivery of energy resources to
export points and to users within the domestic
energy market.
2) Incorporate spatial, statistical, explanatory and,
where appropriate, interpretive assessments
(past, present and projected) covering:
a) energy resources, including conventional oil,
gas (natural and coal seam methane), coal and
uranium resources; renewable resources (wind,
solar, hydro and biomass); emerging resources,
including geothermal, and non-conventional
resources requiring further development (oil
shale, tight gas sands, hydrate resources, deep
coals (underground gasification), marine energy
(renewable wave and tidal power) and thorium
b) economic information from exploration,

development, production, to use (export and
domestic)
c) infrastructure, from exploration, development
and delivery to market of energy.
3) Incorporate (where available) related general
information, including:
a) human professional, technical and related
resources of the energy resources sector
b) social information (from the Australian Bureau
of Statistics).
4) Deliver:
a) a common lexicon of energy resources
and economic definitions
b) a comprehensive outline (content and
sources) of the full assessment by June
2009, including initial analyses to inform the
Energy Green Paper; the assessment, and
in particular the resources component, is to
be linked to existing resource information
systems and internet-based mapping systems
c) a report on future information requirements
to support Australian energy resources
exploration and development to 2030,
by September 2009
d) a completed Australian Energy Resources
Assessment to be published as a companion
document to the Energy White Paper in
December 2009.
335
Appendix B: Abbreviations and Acronyms

ABARE Australian Bureau of Agricultural and
Resource Economics
JORC
Joint Ore Reserves Committee
LCOE
Levelised cost of electricity
ABS
Australian Bureau of Statistics
LNG
Liquefied natural gas
AEMC
Australian Energy Market Commission
LPG
Liquefied petroleum gas
APEC
Asia Pacific Economic Cooperation
MRET
Mandatory Renewable Energy Target
APERC
Asia Pacific Energy Research Centre
NEM
National Electricity Market
APPEA Australian Petroleum Production and

Exploration Association
ASX
Australian Securities Exchange
BOM Bureau of Meteorology (Australian

Government)
CCS
Carbon (dioxide) capture and storage
COAG
Council of Australian Governments
CPRS
Carbon Pollution Reduction Scheme
CSG
Coal seam gas
CSIRO Commonwealth Scientific and Industrial

Research Organisation
DCC Department of Climate Change
(Australian Government)
DEWHA Department of the Environment, Water,
Heritage and the Arts (Australian
Government)
336
OECD Organisation for Economic Co-operation

and Development
OPEC Organisation of Petroleum Exporting
Countries
R&D
Research and development
RD&D
Research, development and demonstration
RET Department of Resources, Energy and

Tourism (Australian Government)
RET
Renewable Energy Target
SDR
Sub-economic demonstrated resources
USGS
United States Geological Survey
WEC
World Energy Council
Units
GJ
Gigajoule 109 joules
EDR
Economic demonstrated resources
Gt
Gigatonne 109 tonnes
EIS
Environmental impact statement
GW
Gigawatt 109 watts
EPA
Environment Protection Agency
kt
Kilotonne thousand (103) tonnes
EPBC Environmental Protection and Biodiversity

Conservation Act 1999 (Commonwealth of
Australia)
kW
Kilowatt thousand (103) watts
kWh
Kilowatt-hours thousand (103) watt-hours
ML
Megalitre million (106) litres
mmbbl
Million (106) barrels
Mt
Million (106) tonnes
MW
Megawatts 106 watts
MWh
Megawatt-hours 106 watt-hours
PJ
Petajoules 1015 joules
tcf
Trillion (1012) cubic feet
TJ
Terajoules 1012 joules
TWh
Terawatt-hours 1012 watt-hours
EPRI
Electric Power Research Institute (of USA)
ETS
Emissions Trading Scheme
GA
GHG
Greenhouse gas (emissions)
GSHP
Ground source heat pump
IEA
International Energy Agency
IGCC Integrated gasification combined cycle

(electricity generation technology)
INF
Inferred resources
APPE NDI CE S
Appendix C: Glossary
Accumulation (petroleum)
An individual body of naturally occurring petroleum in
a reservoir or a group of reservoirs that are related
to a localised geological structural feature and/or
stratigraphic condition (trap).
Availability factor
Percentage of time that an electricity generating plant
can be operated at full output.
Base load
The minimum level of demand (load) on an electricity
supply system that exists 24 hours a day.
Biofuels
Liquid fuels (e.g. ethanol, biodiesel) produced directly
or indirectly from biomass.
Biogas
Gas captured from landfill sites (garbage tips),
sewage treatment plants and livestock feedlots.
Biomass
Vegetable and animal derived organic materials, such
as forestry residues, wood waste, bagasse (sugar
cane residue), oilseed crops and animal waste.
Basin
A geological depression filled with sedimentary rocks.
Capacity factor
The amount of electricity that the plant produces over
a given period divided by the amount of electricity it
could have produced if it had run at full power over
that same period.
Cogeneration
Also known as a CHP (combined heat and power).
Simultaneous production of heat and electricity in the
one fuel combustion process.
Completion (petroleum)
The process by which a finished well (borehole) is
either sealed off or prepared for production.
Conventional resources (petroleum)
Petroleum resources within discrete accumulations
that are recoverable through wells (boreholes)
and typically require minimal processing prior to
sale. For natural gas, the term generally refers to
methane held in a porous rock reservoir frequently
in combination with heavier hydrocarbons.
Conversion
The process of transforming one form of energy into
another before use. Conversion itself consumes
energy, calculated as the difference between the
energy content of the fuels consumed and that of
the fuels produced.
Development
Petroleum: phase in which a proven oil or gas field is
brought into production by drilling production wells.
Minerals: phase in which the mineral deposit is brought
into production through development of a mine.
Discovered petroleum initially-in-place

Quantity of petroleum that is estimated, as of a given
date, to be contained in known accumulations prior
to production.
Discovery
Petroleum: first well (borehole), in a new field from
which any measurable amount of oil or gas has been
recovered. A well that makes a discovery is classified
as a new field discovery (NFD).
Minerals: first drill intersection of economic grade
mineralisation at a new site.
Enhanced oil recovery
The extraction of additional petroleum, beyond
primary recovery, from naturally occurring reservoirs
by supplementing the natural forces in the reservoir.
It includes water flooding and gas injection for
pressure maintenance (secondary processes) and
any other means of supplementing natural reservoir
recovery processes, including thermal and chemical
processes to improve the in-situ mobility of viscous
forms of petroleum (tertiary processes).
Exploration
Phase in which a company or organisation searches
for petroleum or mineral resources by carrying out
detailed geological and geophysical surveys, followed
up where appropriate by drilling and other evaluation
of the most prospective sites.
Extension/appraisal wells (petroleum)
Wells (boreholes) drilled to determine the physical
extent, reserves and likely production rate of a field.
Field (petroleum)
An area consisting of a single reservoir or multiple
reservoirs grouped on, or related to, the same
individual geological structural feature and/or
stratigraphic condition.
Fossil fuels
A hydrocarbon deposit in geological formations
that may be used as fuel such as crude oil, coal or
natural gas.
Gas-to-liquids
Technologies that use specialised processing (e.g.
Fischer-Tropsch synthesis) to convert natural gas into
liquid petroleum products.
JORC Code
The Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves,
prepared by the Joint Ore Reserves Committee.
It is a principles-based code which sets out
recommended minimum standards and guidelines
on classification and public reporting in Australasia.
Companies listed on the Australian Securities
Exchange are required to report exploration
outcomes, resources and reserves in accordance
with the JORC Code standards and guidelines.
337
Liquid fuels
All liquid hydrocarbons, including crude oil,
condensate, LPG, and other refined petroleum
products.
Prospect (geological)
A potential accumulation of petroleum or minerals
that is sufficiently well defined to represent a viable
drilling target.
Load factor
The ratio of the actual amount of kilowatt-hours
delivered on a system in a given period of time to the
total possible kilowatt-hours that could be delivered
on the system over that same time period.
Renewable resources
Resources that can be replenished at a rate equal
to or greater than the rate of depletion, such as
biomass, hydro, solar, wind, ocean and geothermal.
Megawatt, gigawatt, terawatt

106, 109, 1012 watts respectively. Measures of
electricity generator capacity or output. Consumption
is measured in multiples of watt-hours. See also
Appendix E.
Non-renewable resources
Resources, such as fossil fuels (crude oil, natural
gas, coal) and uranium that are depleted by
extraction.
Peak load
Period of most frequent or heaviest use of electricity.
Petajoule
1015 joules, the standard form of reporting energy
aggregates. One petajoule is equivalent to 278
gigawatt-hours. See also Appendix E.
338
Play (geological)
A model that can be used to direct petroleum
exploration. It is a group of fields or prospects in
the same region and controlled by the same set of
geological circumstances.
Primary energy
Energy found in nature that has not been subjected
to any conversion or transformation process.
Primary fuels
The forms of energy sources obtained directly
from nature. They include non-renewable fuels
such as black coal, brown coal, uranium, crude oil
and condensate, natural gas, and renewable fuels
such as biomass, hydro, wind, solar, ocean and
geothermal.
Primary recovery
The extraction of petroleum from reservoirs utilising
the natural energy available in the reservoirs to move
fluids through the reservoir rock to points of recovery.
Production
Petroleum: the phase of bringing well fluids to the
surface, separating them and storing, gauging and
otherwise preparing them for transport.
Minerals: the phase at which operations produce
mined product.
Resources
A concentration of naturally occurring solid, liquid or
gaseous materials in or on the Earths crust in such
form and amount that its economic exploitation is
currently or potentially feasible. See also Appendix D.
Total final energy consumption
The total amount of energy consumed in the final or
end-use sectors. It is equal to total primary energy
consumption less the energy consumed or lost in
conversion, transmission and distribution.
Total primary energy consumption
Also referred to as total domestic availability.
The total of the consumption of each primary fuel
(in energy units) in both the conversion and enduse sectors. It includes the use of primary fuels
in conversion activities notably the consumption
of fuels used to produce petroleum products and
electricity. It also includes own-use and losses in
the conversion sector.
Trap (geological)
Any barrier to the upward movement of oil or gas,
allowing either or both to accumulate. The barrier
can be a stratigraphic trap, an overlying impermeable
rock formation or a structural trap as result of
faulting or folding.
Unconventional resources (petroleum)
Resources within petroleum accumulations that are
pervasive throughout a large area and that are not
significantly affected by hydrodynamic influences.
Typically, such accumulations require specialised
extraction technology. Examples include coal seam
gas (CSG), tight gas, shale gas, gas hydrates,
natural bitumen and shale oil.
Undiscovered accumulation (petroleum)
Generally, all undiscovered petroleum deposits
irrespective of their economic potential. All of the
petroleum accumulations that may occur in multiple
reservoirs within the same structural or stratigraphic
trap are referred to as undiscovered fields.
Wildcat well
A petroleum exploration well drilled on a structural or
stratigraphic trap that has not previously been shown
to contain petroleum.
APPE NDI CE S
Appendix D: Resource Classification

Development of new energy sources requires
reliable estimates of how much energy is available
at potential development sites. The estimation and
classification of energy resources varies according
to type.
Mineral and petroleum resource

classification
The non-renewable energy resources are geologicallybased and their classification is largely based on the
McKelvey resource classification system.
The McKelvey resource classification system classifies
known (identified) resources according to the certainty
or degree of (geological) assurance of occurrence
and the degree of economic feasibility of exploitation
either now or in the future. The first takes account of
information on the size and quality of the resource,
whereas the economic feasibility considers the
changing economic factors such as commodity prices,
operating costs, capital costs, and discount rates.
The assessments of identified resources resources
for which the location, quantity, and quality are known
from specific measurements or estimates from
geological evidence are based on and compiled
from resource data reported for individual mineral
deposits and petroleum and gas accumulations
by companies but take a long term (2025 year)

view of the feasibility for economic extraction. The
Australian Securities Exchange mandates standards
for the public reporting of mineral and petroleum
resources by Australian-listed companies. Oil and
gas companies are required to follow the Petroleum
Resources Management System of the Society
of Petroleum Engineers in reporting petroleum
resources or define the alternative standard used.
Listed companies must follow the Joint Ore Reserves
Committee (JORC) Code for the public reporting of ore
reserves and mineral resources under their control.
Data from company reports on specific projects
are aggregated into categories in the national
classification scheme to provide estimate of the
national resource base.
In the national system used by Geoscience Australia
(figure D.1), Demonstrated resources are resources
that can be recovered from an identified resource and
whose existence and quality have been established
with a high degree of geological certainty, based
on drilling, analysis, and other geological data and
projections.
Economic demonstrated resources (EDR) are
resources with the highest levels of geological and
economic certainty. For petroleum these include
339
Identified resources
Economic Demonstrated
Resources
Demonstrated resources
JORC mineral reserves
Subeconomic
Resources
DECREASING ECONOMIC FEASIBILITY
DECREASING GEOLOGICAL ASSURANCE
Subeconomic mineral
resources
Proved petroleum
reserves
Proved and probable
petroleum reserves
Inferred resources
JORC inferred
mineral resources
Possible petroleum resources
JORC measured
and indicated
mineral resources
Contingent proved
and probable
petroleum resources
Undiscovered resources
Quantitative mineral
potential assessments
Undiscovered petroleum
resource assessments
Contingent possible
petroleum resources
AERA D.1
Figure D.1 Australias national energy resources classification scheme (based on the McKelvey resource
classification scheme). See text for explanation of terms
remaining proved plus probable commercial reserves.

For minerals, these include JORC Code proved
and probable ore reserves and measured and
indicated mineral resources. For these categories,
profitable extraction or production has been
established, analytically demonstrated or assumed
with reasonable certainty using defined investment
assumptions.
Sub-economic demonstrated resources (SDR) are
resources for which, at the time of determination,
profitable extraction or production under defined
investment assumptions has not been established,
analytically demonstrated, or cannot be assumed
with reasonable certainty (this includes contingent
petroleum resources).
Inferred resources (INF) are those with a lower level
of confidence that have been inferred from more
limited geological evidence and assumed but not
verified. Where probabilistic methods are used there
should be at least a 10 per cent probability that
recovered quantities will equal or exceed the sum of
proved, probable and possible reserves.
340
Undiscovered or potential resources are unspecified

resources that may exist based on certain geological
assumptions and models, and be discovered
through future exploration. Undiscovered resource
assessments have inbuilt uncertainties, and are
dynamic and change as knowledge improves and
uncertainties are resolved.
Uranium resources at the national level are
commonly reported under the Nuclear Energy
Agency/International Atomic Energy Agency (IAEA)

uranium resources classification system. Economic
Demonstrated Resources correlate with Reasonably
Assured Resources recoverable at <US$80/kg U, and
Inferred Resources are the same in both systems.
Coal resources are reported as Recoverable coal
resources to allow for losses during mining.
Renewable Energy Resource Classification

Renewable energy resources are commonly transient
and not always available, and hence not readily
classified using the McKelvey system. Renewable
resources are often reported in terms of output or
installed capacity. Estimates of renewable resource
potential are based on maps that show the energy
(or power) potentially or theoretically available at the
site and detailed studies of the annual and diurnal
variation in the energy to determine the capacity
factor (the average actual energy output compared
with the theoretical maximum possible output if the
energy was continuously and fully available for use).
A code based on JORC the Australian Code for
Reporting of Exploration Results, Geothermal
Resources and Geothermal Reserves has been
developed for the public reporting of geothermal
exploration results and classification of geothermal
resources and reserves, covering all forms of
geothermal energy. Geothermal reserves are energy
that is commercially recoverable now, whereas
Geothermal resources require further work to
be classified as Geothermal reserves.
APPE NDI CE S
Appendix E: Energy Measurement and Conversion Factors

The basic international unit of energy across all energy types is the Joule (J). It is defined as the amount of
work done by a force of one Newton exerted over a distance of one metre.
The basic unit of power or energy per unit time is the Watt (W), which is equal to one Joule per second.
The common unit for electricity is watt (W or We) which refers to electric power produced, while watt thermal
(Wt) refers to thermal (heat) power produced. Electricity usage (power consumption) is reported in kilowatthours per year (kWh/yr), the average rate at which energy is transferred.
Both Joules and Watts are more commonly recorded in multiples.
Decimal numbering system

Multiples of energy measurements in Australia are expressed in standard international decimal
classification terms:
Multiple
Scientific exp.
Term
Abbreviation
Thousand
103
Kilo
Million
10
Mega
Billion
10
Giga
Trillion
1012
Tera
Quadrillion
10
Peta
6
9
15
Energy measurement
Energy production and consumption are typically reported in the International System of Units (SI) as
petajoules (PJ) as used here but in some cases are reported in barrels of oil equivalent (BOE) and million
tonnes of oil equivalent (MTOE).
Individual energy resources are commonly reported according to prevailing industry conventions. Petroleum
is reported by volume and weight according to either the SI or the United States system as used by the
American Petroleum Institute.
In this report energy is reported in standard SI units (PJ) with the conventional volume or weight equivalent
terms widely in use in industry in parentheses.
Energy resource
Measure
Abbreviation
Oil and condensate
Production, reserves: Litres (usually millions or billions)

or barrels (usually thousands or millions)
L, ML, GL
bbl, kbbl, mmbbl
Refinery throughput/capacity: Litres (usually thousands

or millions) or barrels per day (usually thousands or
millions)
ML, GL per day

bd, kbd, mmbd
Natural gas
Cubic feet (usually billions or trillions)

Or cubic metres (usually millions or billions of cubic metres)
bcf, tcf
m3, mcm, bcm
LNG
Tonnes (usually millions)
t, Mt
Production rate: Million tonnes per year
Mtpa
LPG
Litres (usually megalitres)

or barrels (usually millions)
L, ML
bbl, mmbl
Coal
Tonnes (usually millions or billions)

Production rate: tonnes per year (usually kilotonnes
or million tonnes per year)
t, Mt, Gt
tpa, Mtpa
Uranium
Tonnes (usually kilotonnes) of uranium or

of uranium oxide
t U; kt U
t U3O8; kt U3O8
Electricity
Capacity: watts, kilowatts, etc

Production or use: watt-hours, kilowatt-hours, etc
W, kW, MW
Wh, kWh, MWh
Bioenergy
bagasse, biomass
Tonnes (or thousands of tonnes)
t, kt
341
Fuel-specific to standard unit conversion factors

Oil and condensate
1 barrel
158.987 litres
1 gigalitre (GL)
6.2898 million barrels
1 tonne (t)
1250 litres (indigenous)/

1160 litres (imported)
Ethanol
1 tonne
1266 litres
Methanol
1 tonne
1263 litres
average
1 tonne
1760 1960 litres
naturally occurring
1 tonne
1866 litres
Natural gas
1 cubic metre (m )
35.315 cubic feet (cf)
Liquefied natural gas
1 tonne
2174 litres
Electricity
1 kilowatt-hour (kWh)
3.6 megajoules (MJ)
LPG
Energy content conversion factors

The energy content of individual resources may vary, depending on the source, the quality of the resource,
impurities content, extent of pre-processing, technologies used, and so on. The following table provides a
range of measured energy contents and, where appropriate, the accepted average conversion factor.
a) Gaseous fuels
PJ/bcf
MJ/m3
Victoria
1.0987
38.8
Queensland
1.1185
39.5
Western Australia
1.1751
41.5
South Australia, New South Wales
1.0845
38.3
Northern Territory
1.1468
40.5
1.1000 (54 GJ/t)
38.8
1.6282
57.5
synthetic natural gas
1.1043
39.0
other town gas
0.7079
25.0
Coke oven gas
0.5125
18.1
Blast furnace gas
0.1133
4.0
Natural gas
342
Average
Ethane (average)
Town gas
b) Liquid fuels
PJ/mmbbl
By volume
MJ/L
By weight
GJ/t
indigenous (average)
5.88
37.0
46.3
imports (average)
6.15
38.7
44.9
propane
4.05
25.5
49.6
butane
4.47
28.1
49.1
mixture
4.09
25.7
49.6
naturally occurring (average)
4.21
26.5
49.4
Liquefied natural gas (North West Shelf )
3.97
25.0
54.4
Naphtha
4.99
31.4
48.1
Ethanol
3.72
23.4
29.6
Methanol
2.48
15.6
19.7
Crude oil and condensate
LPG
Other
APPE NDI CE S
c) Solid fuels
GJ/t
Black coal
New South Wales
Exports metallurgical coal
29.0
Exports thermal coal
27.0
23.4
Other
23.9 30.0
Queensland
Exports metallurgical coal
30.0
Exports thermal coal
27.0
23.4
Other
23.0
Western Australia
Thermal coal
19.7
Tasmania
Thermal coal
22.8
Lignite (Brown Coal)

Victoria
9.8
Briquettes
22.1
South Australia
15.2
Uranium*
Metal (U)
560 000
Uranium Oxide (U3O8)
470 000
Other
Coke
27.0
Wood (dry)
16.2
Bagasse
9.6
* The usable energy content of uranium metal (U) is 0.56 petajoules per tonne, and that of uranium oxide (U3O8) is 0.47 petajoules per tonne.
The oxide contains 84.8 per cent of the metal by weight
Source: ABARE; Geoscience Australia
343
Appendix F: Geological Time Scale and Formation

of Australias Major Energy Resources
The geological timing of some of the major non-renewable energy resources in Australia are charted.
The geological time scale is based on Gradstein FM, Ogg J and Smith AG, A Geological Time Scale 2004,
Cambridge University Press, New York.
Age (Ma) Eon Era
Period
Epoch
Quaternary
Holocene
Pleistocene
Pliocene
Cenozoic
Neogene
23
34
Miocene
Energy Resource
Location
Uranium
Uranium
Yeelirrie deposit
Beverley deposit
Brown Coal
Gippsland Basin
Oil Shale
Series of narrow basins, Central Queensland
Oil and gas source rocks
Gippsland Basin; Bass Basin; Otway Basin
Oil source rocks
North West Shelf (Carnarvon Basin); Bonaparte Basin
Coal seam gas, coal
Surat Basin; Clarence-Moreton Basin
Gas source rocks
North West Shelf; Carnarvon & Browse Basins
Coal
Callide, Ipswich Basins
Gas source rocks
North West Shelf (Carnarvon Basin)
Oligocene
Paleogene
Eocene
Paleocene
66
Late
Cretaceous
Early
146
Mesozoic
Late
Jurassic
Middle
Early
200
Late
Triassic
Middle
Early
Lopingian
251
299
Cisuralian
318
359
Pennsylvanian
Black coal
Coal seam gas
Permian
Carboniferous
344
Phanerozoic
Guadalupian
Gunnedah Basin; Bowen Basin; Sydney Basin;

Cooper Basin; Collie Basin
Gzhelian
Kasimovian
Moscovian
Bashkirian
Serpukhovian
Mississippian
Visean
Tournaisian
Late
Paleozoic
Devonian
416
Middle
Early
Pridoli
Ludlow
Wenlock
Silurian
Llandovery
444
Late
Ordovician
Middle
Early
488
Furongian
Series 3
Cambrian
Series 2
Terreneuvian
542
1600
2500
4000
Archean
1000
Proterozoic
542
Neoproterozoic
Mesoproterozoic
Paleoproterozoic
Neoarchean
Mesoarchean
Paleoarchean
Eoarchean
Ediacaran
Cryogenian
Tonian
Stenian
Ectasian
Calymmian
Statherian
Orosirian
Rhyacian
Siderian
Uranium
Uranium
Kintyre deposit
Valhalla deposit
Uranium
Olympic Dam, Jabiluka, Westmoreland deposits
Uranium
Ranger deposit
Hadean
Note: Ma = million years
AERA F.1

Australian Energy Resource Assessment

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Australian Energy Resource Assessment

Uploaded by

Copyright:

Available Formats

Department of Resources, Energy and Tourism

Minister for Resources and Energy: The Hon. Martin Ferguson, AM MP

Commonwealth of Australia, 2010

ISBN 978-1-921672-59-0 (hard copy)

Department of Resources, Energy and Tourism

Australian Bureau of Agricultural

Clean Energy Initiative, and Industrial Energy

This report is the result of input from many

Lindy Gratton (Geoscience Australia)

Assessment Team Leader

Silvio Mezzomo, Chris Evenden (Geoscience Australia),

Geoscience Australia: Lynton Jaques, Marita

Denis Hally-Burton, Dean Hoatson, Elizabeth

ABARE: Allison Ball, Clara Cuevas-Cubria, Alan

Strategic guidance and support was provided by:

Design and production

AU S T RA LIA N E N E RGY RE S O U RC E A S SES SMENT

The secure supply of affordable, reliable,

increasingly important role in Australias energy

AU S T RA LIA N E N E RGY RE S O U RC E A S SES SMENT

resources. Each resource assessment follows a

These assessments are supported by a number

system. Renewable resources are often reported

Chapter 1: Executive Summary

Australia in the world energy market

Australias energy resources and market

Outlook for Australias energy resources and market to 2030

Chapter 2: Australias Energy Resources and Market

Australia in the world energy market

Australias energy resources and infrastructure

Australias energy market to 2030

Australia in the world energy market

Current world market snapshot

World energy market outlook to 2030

Australias energy resources and infrastructure

Australias energy resource base

Distribution, ownership and administration of energy resources

Australias energy market to 2030

Energy market drivers

Overview of Australian energy production, consumption and trade

Outlook for Australias energy market

World oil resources and market

Australias oil resources

Australias oil market

Background information and world market

Oil supply chain

World oil market

Australias oil resources and market

Crude oil resources

AU S T RA LIA N E N E RGY RE S O U RC E A S SES SMENT

Outlook to 2030 for Australias resources and market

Key factors influencing the outlook

Outlook for coal market

Chapter 6: Uranium and Thorium

World uranium and thorium resources and market

Australias uranium and thorium resources

Key factors in utilising Australias uranium and thorium resources

Australias uranium and thorium market

Background information and world market

Uranium supply chain

World uranium market

Australias uranium resources and market

Outlook to 2030 for Australias resources and market

Key factors influencing the outlook